Professional Documents
Culture Documents
2013
NAUKHEZ SARWAR
TABLE OF CONTENTS
Chapter 1: Introduction
1.0. Introduction
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2.7. Conclusion
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3.5. The role of the State Bank of Pakistan during the privatization stage
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3.7. Conclusion
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5.1. Hierarchical position and attributes of the HR Head in the case-study banks
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5.4. Perceptions of HR and line managers related to the role orientation of the HR
function
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5.5. Conclusion
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6.2. Major challenges in the HR-line relationship affecting the extent of devolution199
6.2.1. Disdain of line managers for HR work
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6.2.3. Lack of people management skills and inadequate training of line managers 207
6.2.4. HR policies and implementation
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6.3. Conclusion
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7.1.2. Corporate HR
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7.6. Conclusion
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8.7. Conclusion
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Bibliography
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Appendices
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LIST OF FIGURES
Figure 2.1: Theoretical framework
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University of Manchester
Naukhez Sarwar
Title: The strategic role of the HR function in the banking sector of Pakistan:
Analysis of evidence and influencing factors
July 2013
Abstract
This thesis analyses empirical evidence of the state of the HR function and the presence of the
strategic role of the HR function in the banking sector of Pakistan. The focus of analysis is on
key components of the HR function that influence its role orientation, namely the patterns of
devolution of HR responsibilities, the structure of the HR function and the skill-set of HR
personnel. The extant literature on HRM and the role of the HR function is for the most part
contextualized within Anglo-Saxon countries and as a consequence insufficiently highlights
the idiosyncratic and embedded factors which influence the role and strategic direction of the
HR function in developing countries. Also, while the literature suggests that different
stakeholders are likely to report divergent views regarding the role of the HR function, few
studies provide a thorough examination of this issue. To address these gaps in the literature, a
qualitative case-study approach was adopted and interviews were conducted with 85 HR,
senior and line managers in eight case-study banks. The data analysis largely fails to identify
a significant presence of the strategic role of the HR function across the sample banks. It also
indicates a generally low level of devolution of HR activities to line management, which has
impeded the ability of HR managers to devote more time and resources to strategic initiatives.
Even where devolution has occurred, it has not enabled the HR function to enhance its
strategic contribution. The evidence also suggests that where organisations implemented
structural changes to their HR function ostensibly, to enhance the strategic orientation, this did
not result in meaningful outcomes and, moreover, the lack of requisite business acumen
among HR personnel appears to have impeded their strategic contribution. In the context of
Pakistan, these findings emerged because the HR function was in an early stage of
development, the strategic HR role required a skill-set which had just begun to emerge and the
underpinned reasons for changes in the structure were to attain better operational efficiency.
Further, in the domestic case-study banks, the function faced challenges of an out-dated skillset of incumbent employees and the ensuing legacy effects. These results suggest that in order
to study the presence of a strategic role orientation, a broader analytical framework is required
that both incorporates multiple elements within the HR function especially its structure,
extent of devolution of HR activities and skill-set of personnel and responds to the multiple
and conflicting perspectives of different stakeholders in a complex and fast-changing industry
environment.
8
Declaration
No portion of the work referred to in the thesis has been submitted in support of an
application for another degree or qualification of this or any other university or other
institute of learning.
Copyright Statement
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owns certain copyright or related rights in it (the Copyright) and s/he has given The
University of Manchester certain rights to use such Copyright, including for
administrative purposes.
ii. Copies of this thesis, either in full or in extracts and whether in hard or electronic
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This page must form part of any such copies made.
iii. The ownership of certain Copyright, patents, designs, trademarks and other
intellectual property (the Intellectual Property) and any reproductions of copyright
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described in this thesis, may not be owned by the author and may be owned by third
parties. Such Intellectual Property and Reproductions cannot and must not be made
available for use without the prior written permission of the owner(s) of the relevant
Intellectual Property and/or Reproductions.
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(see http://documents.manchester.ac.uk/DocuInfo.aspx?DocID=487), in any relevant
Thesis restriction declarations deposited in the University Library, The University
Librarys regulations (see http://www.manchester.ac.uk/library/aboutus/regulations)
and in The Universitys policy on Presentation of Theses.
Dedication
10
Acknowledgement
I am grateful to Almightly Allah for His countless blessings and for the strength He
gave me to accomplish this overwhelming task. I would like to acknowledge the
complete encouragement and support of my advisor, Prof. Damian Grimshaw in the
accomplishment of this task.
throughout these years and it was most instrumental in the completion of this thesis. I
would also like to express my gratitude for his patience, especially in ignoring the
delays at my end in meeting the submission deadlines to which I think I gave an
entirely new meaning. Sincere thanks are also due to Prof. Mick Marchington for his
knowledgeable feedback which was vital in developing a clear focus. I would also
like to thank Dr. Ashfaque H. Khan, for his instrumental role in facilitating access to
the case-study banks explored which would otherwise have been impossible. A final
note of thanks is also due to my employer (National University of Sciences and
Technology) for sponsoring my studies.
11
Chapter 1: Introduction
1.0. Introduction
A significant body of literature that has investigated the HR function in recent years
suggests that it is undergoing major changes that have resulted in the emergence of
new HR roles, including a strategic HR role (eg. Lengnick-Hall et al., 2009; Wright,
2008; Caldwell, 2008; Jamrog and Overholt, 2004). The role of the HR function is of
consequence as it indicates the contribution made by the HR department to the
organisation. In this connection, various studies emphasise that in recent times its
significance has been associated with the alignment of HRM policies and practices to
the overall strategic goals of the organisation (Truss 2008; Wright 2008; Dany et al.,
2008; McCracken and Heaton 2012). The presence of a strategic role is conceptualised
in various role typologies that distinguish between strategic and operational
components (Truss, 2009). However, the notion of, and empirical evidence for, a
strategic role of the HR function is widely contested. Because it is defined in a
diversity of ways in the literature (Brandl and Pohler, 2010), it is perhaps no surprise
that no single, unified set of dimensions is employed to examine its presence within
organisations. Also, because previous studies on the HR function generally examine a
limited number of indicators of what may be said to constitute a strategic HR role,
typically in isolation of the wider organisational context (Truss et al., 2002; Truss,
2008; Tamkin et al., 2006; Brandl and Pohler, 2010; Caldwell, 2003), there would
appear to be a need for further research that seeks to integrate multiple indicators of
the evidence of the presence (or otherwise) of a strategic HR role and extends the
analysis to a wider consideration of the organisational pressures for change,
identifying the possible enabling and hindering conditions.
As with many areas of research in human resource management, the significance of
country context is fundamental to the interpretation of HR role typologies (eg.
Lengnick-Hall et al., 2009; Warner, 2011). While several groundbreaking studies in
the Asian region exist, as Budhwar (2004) argues, these studies tend to have been
undertaken in the relatively advanced countries in the region, such as Singapore, Hong
Kong and Taiwan, leaving a great deal of unexplored territory in less developed,
emerging economy countries. An important motivation for this thesis was therefore
the aim to contribute to our knowledge of HRM in the country context of Pakistan,
12
with a specific focus on the HR function and its role in the banking sector. In its
research design, this PhD research project also sought to respond to a dearth of focus
in studies of the HR function on the divergent perspectives and interests held by
multiple stakeholders (Hope-Hailey et al., 2005); this methodological gap is addressed
in this research by incorporating the views of both HR and line managers.
Furthermore, the literature also highlights the influence of the variation in the level
and form of devolution of HR activities to line managers; devolution or lack thereof
can either facilitate or impede the function from performing a strategic role.
Devolution may be considered a strategy to improve the HR-line relationship given
the assumption that the transfer of operational work to line managers will provide
more opportunities for HR managers to perform the strategic role (Kulik and Perry,
2008; Brandl et al., 2009; Delmotte and Sels, 2008). Thus, devolution has been
debated at length in the HR literature, in relation to its positive contribution to improve
and develop a strategic HR-line relationship and hence a strategic focus of the HR
function (Kulik and Perry, 2008; Kulik and Bainbridge, 2006; Larsen and Brewster,
2003; Whittaker and Marchington, 2003; Cunningham and Hyman, 1999; Currie and
Procter, 2001). However, the traditional definition of devolution has been criticised
due to its generally limited scope, which does not include a broader examination of the
reallocation of HR activities across multiple dimensions of power that include decision
making, financial and expertise power (Cascon-Pereira et al., 2005).
Similar to devolution, the literature on the HR function also accords significance to the
influence of the HR structure and skill-set of HR employees on the role performed by
the function. According to Lawler III and Mohrman (2003), the importance of HR
structures lies in the fact that they are contributors to organisational profitability.
Thus, they posit that the HR function needs to be designed in such a way that it carries
out administrative as well as the strategic partner role. Also, Purcell (2003) states that
the HR function is being renewed and restructured in organisations in order to
gradually affirm a strategic role, indicating that the structural configuration can
influence the role orientation of the function. Further studies show that in order to
fulfil the vital and challenging responsibilities of the HR function, HR professionals
need to have the relevant strategic skills or core competencies that integrate business
strategy with people management practices (Inyang 2010; Ulrich and Brockbank
2005; Ramlall 2006). Thus, in an effort to draw a clearer understanding of the
13
complex yet inter-linked elements of the HR function that shape the role it performs,
this PhD research seeks to integrate evidence of the presence (or otherwise) of a
strategic HR role with evidence of the influencing factors in order to bridge this gap in
the existing literature.
1.1. Objectives and rationale for the study
The objective of this research is to study the state of the HR function in the banking
sector of Pakistan which fits the general description of an emerging economy. In
general, relative to the developed economies such as the USA and the UK, the HR
function can be characterised to be in the initial stages of its development in the
Pakistani banks investigated. More specifically, we aim to examine the role performed
by the HR function in the case-study banks in an attempt to identify the presence and
character of a strategic HR role. This involves the interrogation of how and why
certain factors like devolution, the HR structure and the skill-set of HR personnel can
influence the role performed by the HR function.
The rationale for this research is rooted in certain gaps that emerge from a review of
extant literature. One major gap relates to the need for an extensive study to explore
the HR function (Guest, 2011; Kraaijenbrink et al., 2010; Paauwe, 2009; Boswell,
2006) and to interpret the HR roles in the context of Pakistan. Research on the HR
function and its role is primarily conducted in the USA and European settings
(developed economies), despite its significance and far-reaching implications for
organisations in other regions of the world. To the best of our knowledge, the context
of Pakistan (a developing country) remains under-researched. The few studies on
HRM in Pakistan are restricted to broader HRM themes, such as the type of HR
practices employed in organisations (Khilji 1999a; 1999b; 2001) and the modes of
convergence or divergence among these practices (Khilji 2002), but none specifically
focuses on the HR function and its role. Hence, we examine this phenomenon in the
setting of Pakistan in order to contribute new knowledge to the literature on
international HRM.
The rationale for selecting the banking sector lies in the significant transformation it
underwent in Pakistan from the late 1990s till the first decade of the 21st century. This
transformation resulted in considerable changes within the HR function which
14
provides a strong rationale for this selection to conduct the study. Rapid growth of the
sector, fuelled by the entry of new banks post-deregulation and privatisation, increased
competition and these drivers compelled the banks to initiate major reforms. One
important element of the reforms initiative was the desire to revamp the HR
departments in the banks which led to changes in the structure, practices and activities
of the HR function. This background of a potentially radical, transformative change
led us to choose the banking sector as a subject of our inquiry. The intent was to
examine whether and if the HR function had adopted a new strategic role in the
dispensation of its activities and how its structure, skill-set and relationship with line
managers may have influenced its role.
1.2. Organisation of the thesis
This thesis is divided into eight chapters. Chapter one introduces the topic and its
significance, the rationale and the objectives of the research, and provides a
framework for the remainder of this research.
review of the literature that focuses on the main themes of this research which include
the status of the HR function and its role, devolution which underpins the HR-line
relationship, the HR structure, the HR skill-set and the literature on international
HRM. For this purpose, indicators which provide evidence of a strategic role are
reviewed.
role performed by the HR function and then extend the study to include the influence
of the structure of the HR function for example, to understand how and why the role
has shaped into its current form. Chapter five examines the state of the HR function
and its role in the case-study banks; it highlights no significant presence of an HR
function dispensing a strategic role but reports evidence of a shift towards performing
somewhat of a strategic role.
Chapter 6 examines the contested and contrasted phenomenon of devolution and the
resultant divergent perspectives of HR and line managers; it also identifies the
challenges that beset the HR-line relationship. The findings indicate a low degree of
devolution of HR activities to line managers and emphasise that largely the decision
making aspect, not implementation, was devolved. Consequently, the HR managers
were unable to create time to undertake strategic initiatives. Chapter 7 examines the
structure of the HR function, the skill-set of the HR employees and the perception of
the line managers related to the skill-set of HR employees to explore their influence
(or lack thereof) on the role adopted by the HR function in the case-study banks
examined. The findings highlight that the HR function has restructured over a period
of time and in addition to the intent to contribute in strategic decision making, the
reduction of costs and improvement in service delivery to the line were the key
underlying considerations behind the structural changes. Further, evidence indicated
that the skill-set was generally, inadequate and primarily the business knowledge and
strategic orientation of HR employees was weak.
discussion of the major findings of this research as they contribute to the existing
literature; it highlights the limitations and the ensuing implications of these findings
for future research and concludes the thesis.
16
The literature on HRM spans across several decades and explores disparate, themes
and issues.
generated much discussion on the role of the HR function because of its checkered
history. An underlying cause of the debates lies in the fact that the personnel function
has seldom acquired security, independence, stability, status or credibility among its
management peers (Legge, 1995; Torrington, 1998; Truss, 2008; Caldwell, 2003) and
has thus existed in a state of flux. Moreover, according to Morley et al., (2006), the
contemporary nature of the HR function is not particularly acknowledged, perhaps due
to constraints such as HR legacy systems, constant changes and questions on the
contribution or value addition. Additionally, in the South Asian countries and
especially Pakistan, research on HRM is quite thin, compared with that in the western
context. But, the research that exists highlights that organisations in the South Asian
countries are still in the initial stages of learning (participative HRM) from foreign
companies, while tending to maintain their respective national cultures and autocratic
traditions (Miah and Bird, 2007). Thus, by implication, a study of the HR function
with a focus on its role is a significant topic for research in the context of Pakistan.
This chapter establishes the foundation on which our inquiry and analysis will be
conducted and it is divided into seven sections. Section one charts the evolution and
scope of the modern HR function by exploring the changing and evolving nature of
17
the HR function. Section two reviews the typologies of HR roles that have been
developed over a period of time and assesses empirical research that highlights the
drivers for change in the HR role and the indicators which aid in identifying a strategic
HR role. This section thus informs our approach to the research question of whether
or not the HR function in the organisations studied, is performing what can be termed
as a strategic role.
Sections three, four and five, review the literature on devolution, the HR structure and
the HR skill-set to investigate how each elements influences the role adopted by the
HR function. This body of literature informs our analysis related to the question of
why and how these elements influence the role of the HR function (if at all). Section
six provides the essential contextual backdrop for this study by examining the limited
extant literature that is available on HRM, in the setting of Pakistan and other Asian
countries. Finally, section seven concludes this chapter, by summarising the key
issues from which our research questions are derived and identifying theoretical and
methodological gaps in the literature which provide a rationale for conducting this
research. This final section also presents a theoretical framework to define the key
components and boundaries of this research.
The human resource management (HRM) function began to develop and replace the
practice of personnel management after World War II; it has its roots in the corporate
sector of North America, and is today deeply embedded in the fabric of management
theory and practice (Rowley and Warner, 2007). The development of the HR function
was encapsulated by Price (2004, p. 31) as follows:
HRM is an amalgam of description, prescription and logic deduction. It is a
philosophy of people management based on the belief that human resources
18
Regardless of the
rationale or the nature of its practice, HRM has become a common label for
various forms and functions of people management. However, and particularly
at practitioner level, relabeling does not necessarily mean that either the
approach or the content has changed.. The diverse interpretations of HRM
are apparent when we compare practices in different countries and
organisations.
HRM evolved in response to the need for maximizing the utilization of resources
(Guest, 2011; Sun and Pan, 2011; Khandekar and Sharma, 2005; Becker and Huselid,
1998; Pfeffer, 1998) and as a consequence of economic developments and
industrialisation (Jamrog and Overholt, 2004). The industrial revolution significantly
changed the working conditions and the social patterns of the time (Ivancevich and
Glueck, 1989) and led to job specialisation and division of labour (Cascio, 1992). In
1911, Fredrick W. Taylor capitalised on the concept of division of labour and his
scientific management movement emphasised the importance of accurate hiring,
training and incentivizing to improve employee productivity. Towards the end of the
19th century, most organisations began involving themselves in industrial welfare
activity (Eilbirt, 1959) which involved dealing with labour related issues by improving
social and work conditions through hiring welfare secretaries. These changes led to
the development of the first personnel department between 1900s and 1920s (Jamrog
and Overholt, 2004). Table 2.1 below, compiled from a review of literature traces the
evolution of the HR function during the last century.
Post World War I, due to the shortage of skilled labour, high turnover and strained
labour relations, businesses felt the need for a scientific personnel management
function that would support the firms finance, production and sales departments and
would manage employee relations and related problems (Purcell, 2003). Additionally,
post World War II, the role of human resources (HR) focused on employee relations
due to rising unionism, new laws on affirmative action and collective bargaining and
occupational safety (Jacoby and Saguchi, 2002; Walker, 1999). Thus, the personnel
19
function developed from a welfare activity in select factories to a core activity in all
organisations regardless of their size (Watson, 1977).
Table 2.1: Evolution of the HR function over the last century
Era
Industrial
Revolution
Division of labour
Industrial productivity
HR function focused on
Early 1900s
Scientific management
Personnel management
HR function focused on
Post WW1
HR function focused on
Post WW2
Affirmative action
Occupational safety
HR function focused on
1950s 1970s
HR function focused on
1980s 2000s
Further, towards the latter half of the last century, personnel management evolved into
Human Resource Management (HRM) (Sparrow and Hiltrop, 1994), which may be
20
organisations across different levels, such as: the individual level (Guthrie et al., 2009;
Wright et al., 2003; Applebaum et al., 2000); the business unit level (Ngo et al., 2008;
MacDuffie, 1995); at the organisational level (Youndt and Snell, 2004; West et al.
2002); as well as the financial impact of such practices (Akhtar et al., 2008; Collins
and Smith, 2006; Huselid, 1995). Macky and Boxall (2008) have also examined the
relationship between HRM practices and employee attitudes with a focus on the role
of high performance work systems (HPWSs).
21
and Pettigrew (1990; 1992) stress on the role of organisational change management,
while Guest (1987), Lengnick-Hall and Lengnick-Hall (1990), Ulrich (1987), Boxall
(1999) and Brand and Bax (2002) highlight HR policies as a tool for business strategy.
A consensus among authors such as Guest (1987) and Schuler (1992) is that SHRM is
largely concerned with integration of HRM into the business strategy and the
adaptation of HRM at all levels of the organisation. Boxall (1996) explains that
strategic HRM is the interface between HRM and strategic management.
Additionally, our review of literature highlighted some drivers which led to changes in
the HR function and HR practices; the drivers included the need for efficiency, global
service provision, information exchange, core business processes and localization of
decision-making (Brewster et al., 2005). In addition, three enablers of HR
affordability, central HR philosophy and HR excellence and knowledge transfer were
also identified that were also found to place new expectations and pressures on HRM
practitioners. Lundy (1994) also highlighted that in response to globalization and
pressures for competitiveness, the management of human resources transitioned from
routine personnel management towards an integrated functional practice of HRM, with
a strategic process, starting with the chief executives and line managers.
Thus, through this evolution of the HR function emerged the notion of HRs strategic
role orientation, shaped by the very development of the function itself.
This
orientation has been best characterized by the transition HRM has seen from its
administrative beginnings, towards a focus on company operations and finally towards
being an essential element of corporate strategy. The focus of this evolution has
invariably been linked with a firms performance as well.
studies of HRM. Our review highlighted that there is no all-encompassing model that
may be applied. For example, a study elaborating on the Asia-Pacific HRM model
emphasised that while HRM and industrial relations (IR) systems in the region largely
seemed heterogeneous, they possessed both commonalities and diversity.
In
particular, (Warner, 2000) described how the model adopted common measures in
response to broader economic trends such as globalization (soft convergence), while
also tailoring the model to fit customized needs (soft divergence). Indeed, studies into
the way HRM is applied in a borderless economy have been vigilant of the trend of
convergence / best practice / universalism, finding it too naive to encapsulate HRMs
reality (Rowley, 1997).
Thus, with the development of HRM came the development of hard and soft
conceptualisations of the practice; the former viewing people as quantitative economic
factors whose expense must be controlled (Legge, 1995) and the latter viewing people
in human terms, focusing on development and satisfaction. Truss (1999) posits that
soft and hard models of HRM are diametrically opposed along a number of
dimensions, Armstrong (2000) states that the two concepts cannot be distinguished in
precise terms and Ster and Koster (2007) concurs that the concepts are plagued with
inconsistencies and ambiguities.
According to Kandula (2003), from these concepts emerged specific models for HRM,
prominent among these were the Harvard model (Beer, 1985) representing the soft
version and the Michigan model (Tichy et al., 1982; Fombrun et al., 1984)
representing the hard version.
concepts have been debated extensively in the British context which is evidenced in
the model of HRM formulated by Guest (1987). He drew on both the hard and soft
dimensions in his model on HRM; strategic integration is referenced to the hard model
and commitment is associated with the soft HRM model. However, according to
Truss et al., (1999), the problem with incorporating both interpretations is that each
rests on a different set of underlying assumptions and both are found in organisations.
This implies that factors such as internal and external contexts shape the mix (Ibid.,
1999).
24
In addition, the field of SHRM has increasingly exhibited the use of sophisticated
methodological and theoretical practices. The complexity of the field emerges from
triple issues of contentious terminology, a variety in the theoretical approaches and the
differing units of analysis. This ambiguity has been addressed by delineating the
research on HRM in distinct ontological traditions or theoretical perspectives. The
following section reports these perspectives on HRM in order to combine and
crystallize varied points of view.
An extensive review of literature leads us to believe that a significant part of the HRM
literature is based on five leading perspectives or approaches. We identified the
universalistic perspective, the contingency perspective, the resource based view and
the configurational and contextual approach. Martin-Alcazar et al. (2005), highlight
that each of these modes of theorizing represents different approaches to the same
research question as each emphasises a specific dimension of the reality of HRM.
These perspectives are helpful in understanding the strategic nature of HRM, how the
function has developed to reach the position where it is today. Also, they provide a
rich explanation to the phenomenon of HRM, building a contextualized and
multifaceted picture of the link between HRM and organisational performance.
management practices which form the core competencies on which they compete and
thus, universal best practices cannot be generalized for all organisations. Another
criticism is the fact that no consideration has been given to the cost a firm must bear in
order to adopt a set of best practices (Marchington and Grugulis, 2000).
It is
important to note that little certainty exists regarding the HR practices which are more
important or vital for a firms success than others, as well as under which
circumstances they are most potent (Patterson et al., 2007). Authors have varied in the
outcomes of their research regarding best practices for HRM (Hesketh and Fleetwood,
25
2006; Chang and Huang, 2005; Guest et al., 2004; Wright et al., 2001; Marchington
and Grugulis, 2000).
The approach
contextual aspects are most crucial for, or relevant to the HR function with (Boxall
and Purcell, 2008; Marchington and Wilkinson, 2008).
26
Moreover, the contextual perspective argues that HRM influences and is influenced
by, both the external operating environment of the firm, as well as the internal
organisational context in which managerial decisions are made (Brewster, 1999). This
perspective integrates the HR function with the macro-social environment or suprasystem in which it interacts and focuses on the nature of the human resources, level of
analysis and the actors employed in this organisational function. Strategic HRM has
gained popularity with regards to the link between HRM and organisational
performance (Paauwe, 2009; Delery and Doty, 1996; Guest, 1997; Boselie et al.,
2001); this is the cornerstone of the Resource Based View (RBV). The RBV approach
states that the resources of the firm, including human resources, develop a unique
character of that firm, thus creating a competitive advantage (Armstrong, 2009; Delery
and Shaw, 2001). Ibid., (2001) add that HRM practices have the most direct influence
on the human capital of a firm, and that the complex nature of the HRM systems /
practice can enhance the inimitability of the system.
However, in order for a firms resource to become a sustainable competitive
advantage, it must be valuable, rare, imperfectly imitable and non-substitutable. As
resources and capabilities are of primary concern in strategy formulation and a major
source of the firms profitability, the key to strategy formulation lies in understanding
the link between resources, capabilities, competitive advantage and profitability.
Nevertheless, the applicability of RBV has been criticized on many accounts. Boxall
and Purcell (2008) claim that despite the approachs claim, the value of resources is
determined by external and not internal factors, arguing that the competitive advantage
of human resources is determined by changes in the environment and not on the
directions of internal management. Priem and Butler (2001) have noted that RBV is
unable to address matters of causal ambiguity. In addition, the precise nature of
resources that lead to competitive advantage cannot be recognized and configured,
making it difficult to test empirically. The discourse above highlights the complexity
in studies of HRM and indicates that a holistic framework needs to be adopted in
research on HRM. In this research, we adopt a framework that will integrate some of
the disparate factors, in an attempt to develop a richer understanding of role of the HR
function and the influencers which provide answers as to why and how the role was
shaped. In the following section, we critically examine the notion of the role of the
HR function.
27
One of the most noteworthy developments to have influenced the role of the HR
function in recent times is the notion that people management policies and practices
employed by an organisation should be linked to the overall strategic goals of the
organisation (Truss, 2008; Wright, 2008; Dany et al., 2008). A similar conclusion was
drawn by McCracken and Heaton (2012) who studied a single organisation in the
energy sector that had restructured itself along the Human Resource Business Partner
model. Additionally, prescriptive research has pointed to the necessity of the HR
department to enhance its strategic contribution by becoming a strategic partner
(Ulrich, 1997) and this strategic role is considered more desirable when compared to
traditional administrative HR roles in empirical research as well (Truss et al., 2002).
Thus, many recent studies have attempted to investigate the role HR plays within an
organization (e.g. McCracken & Heaton, 2010; Lengnick-Hall et al., 2009; Wright,
2008; Caldwell, 2008, 2001)
Ulrich and Brockbank (2005) define a role as the work that must be done, yielding
identity to its performer, in terms of value added to the organisation. Various role
typologies have emerged in the last two decades and while earlier typologies were
simplistic and focused on tasks performed, the more recent ones acknowledge the
significance of context in the interpretation of these role typologies (Lengnick-Hall et
al., 2009).
management, tracing it over the course of 30 years of the development of the function
to arrive at its current state (as of publication date). The findings of this study were
28
based on the studies conducted on HRM and related fields over the last 30 years (as of
publication date).
Further, during the course of the last two decades, a wide range of scholars (Legge,
1995; Ulrich, 1997; Beer, 1997; Lawler and Mohrman, 2003; Teo, 2002; Zhu et al.,
2012; Ulrich and Brockbank, 2005) have suggested that the role of HR function
should be upgraded in response to growing competitive pressures (Bowen et al.,
2002). This envisioned ramping-up is in line with the view that the HR function will
move away from daily operational work, ergo having more time to make a strategic
contribution to an organization (Truss, 2008; Teo and Crawford, 2005; Caldwell,
2003; Torrington, 1998; Schuler, 1992). In the same vein however, authors also
caution against the dangers of eroding traditional HRM operational roles in the wake
of greater focus of strategy (Teo and Crawford, 2005; Torrington et al., 2005; Kessler,
1995). Torrington et al. (2005) capture the essence of this point by suggesting there is
a risk of HR professionals to retreat to the strategic bunker to think great thoughts and
discuss the shape of the world with like-minded people consuming endless cups of
coffee.
Broadly speaking, the role typologies differentiate between the functions operational
and strategic roles (Truss, 2009), where the traditional, administrative role is
considered routine and reactive with a focus on implementation of HR policies
(Ulrich, 1998; Truss et al., 2002; Marchington and Wilkinson, 2005). Caldwell (2001)
and Boxall and Purcell (2003) extend the administrative role to include employee
welfare activities. Conversely, the strategic role is defined as having a focus on longterm implications of activities such as integrated HR strategies, involvement in
strategic decision making and management of organisational change. It is defined
diversely in literature by the hierarchical position of the HR department (Truss et al.,
1997), the participation of the senior HR managers in the strategy planning process
(Golden and Ramanujam, 1985), the discussion of strategic HR matters at a senior
level (Storey, 1992) and the proactive approach of the function.
The role of personnel professionals has undergone major changes over a period of
time to finally take its current shape (Jamrog and Overholt, 2004); the evolutionary
process of the HR roles is apparent from table 2.2 below.
29
Operational Roles
Legge (1978)
Storey (1992)
Ulrich (1997)
Caldwell (2001)
Conformist Innovator
Problem Solver
Clerk of Works
Contracts Manager
Strategic Roles
Deviant Innovator
Architect
Regulators
Advisors
Handmaidens
Change Makers
Administrative Expert
Change Agent
Employee Champion
Strategic Partner
Adaptor
Synergist
Consultant
Champion
Legge (1978) presented one of the first analyses in this regard by distinguishing
between two roles, that of the conformist innovator and the deviant innovator. The
former attempts to adjust their means to achieve the organisations end (Armstrong,
2009) and endeavours to relate work with the organisations dominant values to satisfy
the senior management (Marchington and Wilkinson, 2005). The latter attempts to
change the means / end relationship (Armstrong, 2009) through a different set of
values and gains credibility and support for the ideas driven by social values rather
than strict economic criteria (Ibid., 2005).
Tyson and Fell (1986) posited another analysis of HR roles by identifying three roles
in their typology, using a construction management metaphor (Truss et al., 2002);
differentiating between roles on a one-dimensional scale of least to most strategic on
the basis of level of discretion, long term focus and integration between business and
HR strategy. They proposed the roles of clerks of work, contracts manager and
architect.
However, the most frequently quoted typology is that of Storey (1992), which was
presented at the cusp of the functions transition from personnel management to HRM.
This typology had empirical foundations, was prescriptive in nature, and differentiated
between roles on a two-dimensional scale; intervention vs. non-intervention and
strategy vs. tactics. The four roles identified were advisor, handmaiden, regulator and
changemaker (Caldwell, 2003; Armstrong, 2009). The advisors were engaged in a
facilitating role and acted as internal consultants to line managers by providing
expertise and advice; the handmaiden (also called Service Providers) was a
tactical/non-interventionary that provided services to the line managers on demand.
The regulators were interventionists who were involved in the tactical task of
formulating and monitoring employee rules and they were deemed managers of
discontent. Lastly, the changemaker role was strategic and interventionist in nature
and focused on business realities, employee commitment and motivation. Though
important, Storeys roles were seen as generic (Caldwell, 2003), being too simple to
capture the true experiences of an organisation (Wilkinson and Marchington, 1994)
and the complicated nature of the HR roles.
Further, in 1997, Ulrich presented his HR role typology based on work in leading US
organisations; he proposed that in order to create and deliver value, HR professionals
have to perform four roles simultaneously, that include the employee champion,
administrative expert, change agent and strategic partner. Ulrich defined the roles on
two axes - strategy vs. operations and processes vs. people. The strategic partner is
responsible to align HR strategy with the business strategy, identify HR priorities and
meeting customer needs.
al., (2006) and Hope-Hailey et al., (2005), despite the fact that Ulrichs (1997) role
typology takes into account the multiplicity and complexity of the HR roles and
highlights the paradox of combining different roles, it does not consider the diverging
perspectives and /or interests of the multiple stakeholders. In recent years this
typology has been re-imagined by Ulrich and Brockbank (2005) to centre on an HR
leader, characterized by the roles of Human Capital Developer, Strategic Partner
(overlap of both Strategic Partner and Change Agent), Employee Advocate and
Functional Expert.
The imaginings of role typologies have not been without critique. While the notion of
the HR function playing the role of a valued business partner (Ulrich 1998) has
generated much interest (Pritchard, 2010; Brown et al., 2004), it has also drawn a great
deal of critique (Sparrow et al., 2010; Francis & Keegan, 2006). Marchington and
Wilkinson (2008) have note, the idealism of prescriptive literature, among which
Ulrichs (1997) work is paramount, has been in circulation long enough to allow for
more independent evaluation of whether or not they improve the HR contribution and
have the power or the influence to have a major impact on business performance.
Hird et al. (2010) found the implementation of Ulrichs prescribed HR delivery model
to be only partially successful. Their study found that the causes for this ranged from
implementing off-the-shelf HR structures (with no plan in place for its use);
fragmentation of such structures (by not considering boundaries between the models
components); little development of new skills-sets required to run the model; no
consideration given to the skill-set and understanding of line management in the
process; and finally, no consideration to the gap created when human resource
business partners (HRBPs) transition to executive work, with centres of expertise
(COE) moving to advisory work. Hird et al. (2010) have further suggested that while
Ulrichs work is influential to the HR profession, attributing each and every recent
development in the field to Ulrich would be erroneous and Caldwell (2003) suggests
that Ulrichs prescriptive vision may promise more than HR professionals can ever
really deliver.
Another criticism of prescriptive literature has been the notion of HR becoming too
strategic to the detriment of actual employee-related matters. Francis and Keegan
(2006) have noted this shrinking of the employee champion role, as HR professionals
32
are encouraged to aspire for the role of strategic or business partner. They note that
this trend is not always welcomed by the individuals concerned, suggesting that HR
practitioners have lost contact with more humane aspects of their work. Keegan and
Francis (2010) have further refined this thought with a discussion on the discursive
dominance of HR business partnership. They argue that organisational pressures (cost
reduction, greater competition and higher degrees of alignment with business strategy)
have caused HR professionals to lose touch with employees. In this respect, HRs role
has been described as an inherently conflictual one (Hope Hailey, 2005; Francis and
Keegan, 2006), where HR simultaneously attempts to serve both management and
employees, potentially resulting in deteriorated interaction between employees and
HR as practitioners.
A review of the related literature above highlights the presence of multiple roles that
may be expected of the HR function and points to the varying perspectives introduced
by different researchers.
literature, creates significant tensions and ambiguities for both HR departments and
practitioners who are attempting to enact or dispense these roles.
According to Morley et al., (2006), the contemporary nature of the HR function is not
particularly acknowledged, perhaps due to constraints such as HR legacy systems, the
function being harried by change and being questioned over its contribution in a
challenging business environment. Further, Ulrich and Brockbank (2005), highlight
the use of different terms to describe an HR professional, for example, coach, enabler,
advocate, change agent, initiative leader, employee champion and business partner, to
name a few.
professionals as an occupational status group and disregard for the HRM operational
activities, particularly people management concerns, have created issues of legitimacy
for the function (Kochan, 2004; 2007). This has resulted in the function being in a
state of constant crisis of confidence (Torrington, 1998; Legge, 1978) and the
development of a focus on the achievement of business-related outcomes, ahead of
employee concerns (Peccei, 2004; Kochan, 2007; Legge, 2005; Thompson, 2003).
Moreover, Truss (2008) and Caldwell (2003) pointed that some of the challenges
confronting the HR function included the issue of powerlessness in decision making
processes at the strategic level, an inability of HR to maintain or defend the boundaries
of their specialist expertise, the lack of clarity in the business outcomes and
contribution and tensions in sustaining mutability of the function, in the face of
opposing interests of the management and employees.
existence of convoluted overlaps between new and old role types, with no clarity on
the limits of role change, while also noting how the volatile process of role change
itself is downplayed. In addition, typologies such as Storeys posit self-contained
roles, leaving practitioners to decide a major or minor role. These must be considered
even more carefully given the context of greater organisational complexity and the
impact these complexities have had on role changes themselves.
34
Also, Francis and Keegan (2006) and Martin (2005) posit that HRM is moving away
from routine administration towards business partnership which is the prescribed
direction given by Ulrich (1997).
extreme alienation of employees from both HRM and management, which has
implications for employee well-being. Thus, as posited by Peccei (2004), a strong
emphasis on the strategic business partner role has downplayed the importance of the
employee champion role, with the former representing a one-sided focus on
organisational outcomes at the expense of the employees (Grant and Shields, 2002).
Hence, our review of literature leads us to agree with Caldwell (2003) who notes that,
personnel roles and the process of role change are much more complex than either
existing empirical research or prescriptive models suggest.
literature debates not only the range of roles performed by the HR function, but also
disputes over the multiplicity or simultaneousness of these roles. We may deduce then
that, the HR roles have grown and evolved into a wider set of responsibilities, lending
to greater confusion on the part of practitioners regarding the actual role expected of
them.
Our review reveals that the context and agency of the HR function are
Prior to analysing the literature on the indicators of a strategic HR role, we define the
strategic role as it has been defined by Truss (2008) and operationalised in this
research.
constitutes the presence of a strategic HR role and the responsibilities that are
associated with an operational role in a study conducted in the UK public sector. They
found that new and more strategic roles of the HR function have yet to replace the
traditional approaches to the function, but they have instead been grafted onto the
existing structure, giving rise to hybrid variations of the function. The strategic HR
role focuses on activities that will have long-term implications, such as the
development of integrated HR strategies, involvement in organisational strategic
decision-making, and managing organisational change. The operational or
administrative role of HR is regarded as routine, reactive and tactical, with tasks
related to the implementation of HR policies, and employee facing roles. The evidence
of such as role would include a focus on processing paperwork, providing information
in response to requests, lack of involvement in key groups and lack of HR strategy,
especially one linked in with organisational needs.
Additionally, prescriptive literature (Ulrich and Beatty 2001; Ulrich, 1997; Ulrich and
Brockbank, 2005) largely converges on a shared understanding that a shift to the
strategic role is desirable, if not essential, for the HR function. However, empirical
literature (Caldwell, 2003; Truss et al., 2002; Guest and King, 2004; Tamkin et al.,
2008) finds that the role actually enacted by the HR function in most cases is reactive
and administrative. Our purpose here is not to classify or pass judgment on the HR
functions dispensation of either an administrative or strategic role, rather we simply
endeavour to outline the ground reality as it stands. That said, Truss et al. (2012)
citing other researchers state that most recent research has suggested that HR has not
become more strategic, with administrative work continuing to dominate the agenda of
HR functions (Marchington and Wilkinson, 2008; Tamkin et al., 2008; Guest and
King, 2004; Caldwell, 2003). Further, a consensus developed among researchers is
that a strategic HR function entails the involvement of the function in the development
of both the organisational strategy and the HRM strategy (Boxall and Purcell, 2003;
Kelly and Gennard, 2007).
36
Indicators for studying the presence of a strategic role identified by Truss (2008)
include the involvement of HR directors in key decision-making groups, structuring of
the HR department with the explicit aim of partnering with line managers,
involvement of mid-level HR managers in strategizing at the business unit level and
efforts to develop long-term and organisationally integrated HR strategies and
policies.
strategic role, as highlighted by various authors which are explained in the following
paragraphs. Other indicators of the presence of a strategic role include the direct
reporting channel to the CEO (Budhwar, 2000; Lawler, 1995; Golden and
Ramanujam, 1985) and the CEOs support for the HR department, enabling it to
perform a more strategic role (Truss, 2009; Brandl and Pohler, 2010; Mullins, 2005).
The findings of Brandl and Pohlar (2010) are based on a qualitative study regarding
the perception of five CEOs in Austria that attempted to evaluate the concerns of
CEOs related to their HR function and the conditions that affect its strategic role.
37
Author(s)
management
Informal network of the HR head with the CEO
HR-Line relationship
Dyer (1999)
strategy
Budhwar (2000)
Organisational culture
Sheehan (2003)
38
Kelly and Gennard (2000) state that membership on the board of directors and
management committees is important because there is an implicit assumption in the
literature that strategic decision making is carried out at this forum. This is because
board level representation helps develop internally consistent and strategically focused
HRM policies and practices (Sheehan, 2003; Kessler et al., 2000). Truss (2009),
Hope-Hailey et al., (1997) and Hall and Torrington (1998) also highlight the inclusion
and presence of senior HR managers in key-decision making bodies as an indicator of
a strategic HR role. Ibid. (2000) posit that if the HR function has little or no presence
on these forums, then it has a limited role to play in the formulation of organisation
strategy, implying that the function is automatically excluded from long-term decision
making for the company and is limited only to implementation of decisions. Thus, the
more, senior HR directors are able to influence the strategic decision-making process,
the more likely it is that an effective HRM policy design will be achieved
Kelly and Gennard (2007) propose three ways in which HR directors can become part
of the BoD. These include first, a vertical pathway, where the HR director assumes a
junior HR position at the start of his/her career and progresses to positions of
increased responsibility. These are the HR generalists, who develop a wider
understanding of the business as members of management committees. The second is
a vertical and horizontal pathway where HR directors possess well-rounded training in
all aspects of HR and other firm functions. The third route is the parachute pathway,
where an HR director has no previous HR experience but is given a seat on the board
due to strong interpersonal and communication skills. Further, they propose that
membership on the main board is not crucial for HRs involvement in strategy
formulation as the board is normally involved in the approval of the strategic decision,
whereas the actual formulation of the strategy occurs at the Chief Executive Officer
39
Group level (CEOG). This group of senior executives makes key decisions as an
organisation attempts to deal with the problems that it faces in its internal and external
environment.
Hall and Torrington (1998) posit that the personality of the HR director influences the
extent of strategic integration of HRM; influential HR directors can increase the
visibility and credibility of the department which can focus on interventions that
enable the adoption of a strategic role in the long term (Truss et al., 2002). In line
with this, a direct and formal reporting channel between the HR function and the CEO
can also help in achieving HRs integration in strategic decision making (Budhwar,
2000; Lawler, 1995; Golden and Ramanujam, 1985) and the informal network that is
developed between the HR director and the CEO is also important in this context
(Sparrow and Marchington, 1998; Hope-Hailey et al., 1997, Kelly and Gennard,
2007). Based on a research of 49 organisations in Scotland (interviews with HR,
finance and marketing directors), which focused on studying the locus of strategic
decision making, Ibid. (2007) found that even if HR directors are not given a seat on
the board or represented at the Chief Executive Officer Group (CEOG), they could
still wield influence via informal channels. Also, an informal network can win HR
directors invitations to attend CEOG level meetings, allowing for input on functional
issues.
background of the HR directors is vital for performing in some newly emerging roles.
Also, it suggests that HR professionals must understand the companys business and
industry dynamics, including how firms are integrated (integrated value chain), how
they create value (value proposition) and the influence of labour dynamics (Boselie
and Paauwe, 2004). Additionally, Kelly and Gennard (2000) contend that HR
generalists are more likely to attain board level positions, as their willingness to
acquire wider business awareness allows them to use this knowledge in developing
HR strategies and policies.
vs.
reactive,
short-term
vs.
long-term
and
transactional
vs.
was supported with caution by empirical studies (Truss, 2009) as well. As a result,
HRM began to use the term proactive as a criterion for successful HRM delivery
(Brockbank, 1999).
Brockbank (1999) proposes that the function can be reactive or proactive at both
operational as well at strategic levels, thus distinguishing between both approaches;
arguing that being proactive in a strategic way leads to very different activities than
being proactive at operational level.
Teo (2000) who explored the link between strategic HRM and organisational
performance and decision making.
The linkages identified by Golden and Ramanujam (1985), represent the four levels of
HRM integration in the strategic decision making process. The integrative strategy
formulation approach entails that the HR function is an inherent part of all business
decisions and its opinion is given due consideration in the decision making process
(Caldwell, 2010). If the HR function is opposed to an option / scenario, the senior
management also becomes reluctant to proceed without HRs consent. At the next
level, the HR function which is included in strategy formulation at the development or
discussion stage is termed as having a two-way formulation process.
In such a
scenario, the HR function provides its feedback on business strategy, which may or
may not be adhered to, but HR is not involved at the outset. This feedback may be
requested either at the strategy development stage where HR has a higher impact or at
the strategy discussion phase where HR has a lower impact. Further, an HR function
that is only involved during the implementation phase of the strategy formulation has
participation limited to that of a one-way strategy formulation option, which means
that HR does not offer feedback in the formulation process and only implements the
directives.
In stark contrast to the discussion above, research in the 1980s and 1990s (Tyson and
Fell, 1986; Storey, 1992; Sisson, 1994; Tyson, 1995) demonstrates that HR personnel
have little influence in strategic business decisions.
Caldwell (2004) and Guest and King (2004) have also concluded that the HR function
plays a limited strategic role in terms of business decision making.
Based on
interviews with C-level officers in 48 organisations, Guest and King (2004) concluded
that there was no clear evidence that the emergence of HRM had delivered an
opportunity for the HR professionals to enter the inner sanctum of strategic decision
making.
Western contributions to the literature have typically focused on integrating HRM into
the business and corporate level strategies.
43
Thus, through a review of the literature on the indicators of a strategic HR role of the
HR department, we conclude that HRM can be more strategic (involved in the
strategic decision making of the organisation) if senior HR personnel are represented
on the Board of Directors (BOD) and if the HR Head possesses a wide-ranged
business acumen and a direct reporting channel with the CEO. A strategic role is also
possible if the function is more proactive and focused on transformational activities
and if HR strategy is aligned with the organisational strategy. Further, of interest for
our research is also to build an understanding of how and why, the HR function
performs the role that it does in the case-study banks for which an examination of the
factors that can influence the role adopted is necessary.
Devolution has been debated at length in the HR literature and has been found to
improve and develop a strategic HR-line relationship (Mayhofer et al., 2011; Kulik
and Perry, 2008; Kulik and Bainbridge, 2006; Larsen and Brewster, 2003; Whittaker
and Marchington, 2003; Conway and Monks, 2010; Cunningham and Hyman, 1999;
Currie and Procter, 2001). Further, almost every functional manager in todays world
is at the forefront of people management (Kulik, 2004), especially at the operational
level. The responsibility for people management does not solely reside with the HR
44
function (Keegan and Francis, 2010; Dany et al., 2008; Purcell and Hutchinson, 2007);
line managers have a key role to play in dispensing HR responsibilities,
implementation of HR practices (Sanders and Frenkel, 2011; Keegan et al., 2011).
The notion of devolution has been considered a desirable output (Cascon-Pereira et al.,
2005), with importance placed on greater line management involvement in HR related
issues (Budhwar, 2000; Currie and Procter, 2001). Kulik and Perry (2008) suggest
that devolution is a strategy to improve the HR-line relationship; the underlying
assumption is that devolution of operational HR activities to line managers provides
more time to HR professionals to add strategic value to the organisation and to
improve its credibility in the eyes of key stakeholders. It is pertinent to note that while
literature suggests that HR specialists are keen to shift their traditional roles towards
more strategic ones (Delmotte and Sels, 2008; Kulik and Bainbridge, 2006; MacNeil,
2003), Renwick (2003) concludes that the notion of obtaining a strategic role while
shifting away from an operational one, is a false one. This is because it is not
necessary that the time spared from devolving operational activities to line managers
will be utilized for strategic interventions.
The rationale for devolution includes the development of a more strategic approach
towards HR (Delmotte and Sels, 2008), the effectiveness of the proximity line
managers have with employees (Purcell and Hutchinson, 2007), the control of costs
associated with the HR function (Kulik and Bainbridge, 2006; Renwick, 2003;
Budhwar, 2000) and the sharing of people-related matters by line managers (Keegan
and Francis, 2010; Lepak et al., 2005; Renwick, 2000). Kulik and Bainbridge (2006)
and Renwick (2003) suggest that organisations devolve HR activities to the line in lieu
of outsourcing those HR functions to a third party. Additionally, in light of constant
cost cutting in todays economy, devolution is considered a means for reducing the
headcount of HR personnel in organisations ((Kulik and Bainbridge, 2006; Larsen and
Brewster, 2003).
devolution of HRM to middle managers in the Irish health services, through interviews
with a cross-section of 48 HR and line managers in one area.
Further, the notion of devolution envisages two contrary implications for the
profession of HRM - optimistic hypothesis and pessimistic hypothesis. The optimists
highlight that as a result of devolution the HR function will be freed to concentrate on
performing strategic HR activities (Hutchinson, 1995; Tyson and Fell, 1986) and will
become a proactive contributor in the organisation (Fonda and Rowland, 1995; Kelly
and Gennard, 1997). Also, the limited competence of line managers in dealing with
devolved personnel matters will ensure a continuing organisational presence for
personnel specialists, which will not only result in their survival but will allow the
function to thrive because of its strategic role. The pessimistic hypothesis indicates
that devolution makes the HR functions contribution to business success even more
difficult to determine because of the fragmented, deconstructed and specialized
organisation of work (Cunningham and Hayman, 1997; Tyson and Fell, 1995) which
46
will lead to the dilution of the status of HR and its diminished legitimacy (Kulik and
Perry, 2008).
Additionally, according to Hall and Torrington (1998), devolution has a direct effect
on the roles performed by the HR function and the line managers, and in order to
comprehend the process of devolution, it is very important to understand the role of
HRM experts in the organisation. According to Tamkin et al. (1997) of all the role
changes for HR, the strategic role has been one of the most marked; in part, the shift
stems from devolution of HR responsibilities to line managers (Sisson and Storey,
2000; Renwick, 2000; Budhwar, 2000). Through devolution, line managers take over
the enactment of various HR activities while HR practitioners facilitate them by
transforming their roles from doers to internal consultants. Thus, Kulik and Perry
(2008), state that devolution of HR activities is one possible opportunity for an HR
units transformation. Their study exploring the effects of devolution on the HR
functions construed image found a positive effect on the functions image of itself
when it was involved in business unit operations and the strategy formulation process.
contrasting notions held by researchers on devolution and the distinct issues that
challenge the effort to devolve HR practices to line managers. In doing so, we hope to
highlight the influence of devolution on the activities performed by the HR function
which determines the role performed by the function.
Our review of the literature on devolution revealed that many researchers strongly
support the move towards devolution while an almost equal number suggest a guarded
approach.
perceptions of both HR and line managers. In addition, Guest and Conway (2011) and
Guthrie et al., (2011).have suggested that in order to gauge the effectiveness of HR,
one must solicit feedback from key customers such as line managers, officers and nonmanagerial staff. Mitsuhashi et al., (2000) and Wright et al., (2001) found that line
managers and the HR managers had different perceptions of the effectiveness of HR
work. HR professionals were generally more positive about the effectiveness of HR
47
roles, HR services and HR contribution than their line counter parts. The authors
suggest four possible reasons for the differing perspectives of both stakeholders. The
reasons include the inability of the HR function to deliver the services expected of
them, the traditional line-staff conflict, the failure of line managers to implement well
designed HR systems and the lack of involvement of line managers in HR activities.
legitimacy from the senior layers of an organisation, the less its role is valued by
employees of the firm, and that serving line managers so greatly, may undermine their
focus on long-term value creation in lieu of short-term actions.
HR work effectively and to use this knowledge fairly and consistently when treating
employees has also been questioned in extant research. Hence, as stated by Larsen
and Brewster (2003), the issues of line managers include the lack of their desire,
capacity, ability and training to undertake HR activities. Also, according to Conway
and Monks (2010), Currie and Proctor (2001), Renwick (2000), line managers quite
often resist the uptake of HR responsibilities and fail to observe the benefits of change.
Conversely, in the perspective of line managers, the effectiveness of the HR function
is underpinned in the involvement of its executives in strategic initiatives for which
they need to perform as strategic business partners (Kulik and Perry, 2008; Sanders
48
and Frenkel, 2011; Dany et al., 2008; Keegan et al., 2011). Also studies have shown
that line managers often identify themselves with short-term job objectives which
proves to be a major impediment for devolution, as their priority tends to be the
achievement of their business goals (Watson and Maxwell., 2007; Maxwell and
Watson, 2006; Gibb, 2003; Harrison, 2002). According to McGovern (1999), even
when performance objectives include line managers personnel responsibilities, few
consider successful implementation of these, to be an important or very important
factor. Whittaker and Marchington (2003) in their study noted that line managers felt
great difficulty in maintaining the softer people skills in the face of meeting hard
targets.
responsibilities of HR and line managers, with regards to the activities each needs to
perform, are sketchy. According to Purcell and Hutchinson (2007) and Brandl et al.,
(2009), in recent times line managers have been encouraged to take on greater
responsibility for the HR activities; this is evident from the enhanced role of line
managers in HRM, over the last twenty years in UK and other developed countries.
Purcell and Hutchinsons research which emphasised on the role of front line
managers in HR practices was conducted on 12 organisations in the UK. As a result,
there are only few areas in which the HR function is now the sole decision maker. In
the following paragraphs empirical studies identifying the distribution of HR activities
across the HR-line divide are reviewed which will enable us to determine the nature
and degree of devolution across distinct HR practices.
According to Maxwell and Watson (2006), and the results from the IRS survey (1995),
the major responsibility of HR activities resides with the HR department more than
with line managers, but in many cases it is shared. Involvement of HR specialists
tends to remain highest in policy formulation where the issues of consistency and
specialist expertise are most important and it tends to be lowest when line managers
are responsible for putting plans into effect (Keegan & Francis, 2010; Lepak et al.,
2005; Whittaker and Marchington, 2003). Line managers are most heavily involved in
motivation and morale of their staff (Watson and Maxwell. 2007), team briefings and
communication, health and safety (MacNeil, 2003), identifying training needs,
employee selection and performance appraisal (Nehles et al., 2006). Additionally,
Hutchinson and Purcell (2007) and Kulik and Perry (2008), posit that line
managements involvement is the greatest in conducting performance appraisals,
agreeing to personnel development plans and planning training and development
needs of the staff with some responsibility for induction. Further, according to Larsen
and Brewster (2003) and Budhwar (2000) there are many HR activities that are shared
between the HR and line managers which include pay and benefits, recruitment and
selection, training and development, health and safety and workforce expansion and
reduction. Furthermore, Kulik and Bainbridge (2006) highlight that HR is dominant
in managing trade unions, handling employee relations and owning the promotion
process.
50
However, (Kulik and Bainbridge (2006) identify that there are certain hot potatoes in
the HR activities that neither the HR nor the line managers are willing to take up.
These hot potatoes include worker compensation, leadership development, succession
and career planning, coaching and performance management. Both parties want to
relinquish their responsibilities as these HR practices are difficult to perform
operationally. However, Kim (2002) and Lin and Li (2004) posit that these HR
practices are major drivers of the long-term organisational health and profitability and
thus, both the parties should work together to find the most effective sharing of these
activities.
Further, according to Bond and Wise (2003), Renwick (2003) and Whittaker and
Marchington (2003) there are both positives and negative consequences of devolution.
Some of the significant advantages of devolution are customized decisions to suit local
circumstances, potential cost savings, increased awareness of people management
issues throughout the organisation, better change management and the HR
practitioners ability to pursue a more strategic role. Additionally, Budhwar (2003)
proposes that devolution allows the HR issues and problems to be solved at lower
hierarchical levels which creates more responsible line managers and increased
efficiency.
51
results in a wide span of control which makes it difficult for line managers to spare
time for people management activities.
Given the discussion above, on the varying perceptions of both stakeholders related to
devolution, we suggest that there is growing consensus on the need for both
stakeholders to work in partnership. In a study on 527 companies based in Hong
Kong, Chen et al. (2011) found that HR managers were eager for interdepartmental
collaboration when working on strategy-related matters. However, some researchers
consider this talk of working in partnership as simple rhetoric (Renwick, 2000), noting
that no clear practical framework exists for these partnerships (Currie and Procter,
2001).
According to a study by Lawler III and Mohrman (2003), on what it means for the HR
function to play the role of a strategic partner, and whether HR is more effective in
such a role (in US organisations), the importance of HR structures lies in the fact that
they are contributors to organisational profitability. They posit that the HR function
needs to be designed in such a way that it carries out administrative as well as the
52
strategic partner role. Further, Purcell (2003), state that the HR function is being
renewed and restructured in organisations to gradually affirm a strategic role.
Additionally, the rapidly changing nature of organisations has a considerable impact
on how the HR function is structured and the range of skills possessed by HR
personnel. These changes include the use of information technology, increase in
knowledge workers, changing business environment and increasing structural
complexity of organisations (Lawler III and Mohrman, 2003). They add that the
structure and transmission of HR activities need to be considered by the HR function
specifically, if the purpose is to develop a strategic role orientation.
Further, our review of literature identified several drivers that pressurize the HR
function to change. According to Schuler and Jackson (2007) globalization is not the
only factor that caused the change in the orientation of the HR function; some other
drivers include tough competition which leads to the concept of HRM as a means to
achieve competitive advantage. In response, organisations adopt different HR
structures to cope with the changing environment. Harvey et al. (2000) identify a
firm's ability to deal with the increasing headquarter / subsidiary complexity
efficiently and effectively as a driver of structural changes. Additionally, Lepak et al.
(1998) identify the performance of multiple HR roles as a driver for structural change
and state that the HR department is expected to perform mainly four tasks. They
include acting as a strategic business partner, providing more flexibility in the HR
practices and policies, cutting costs and efficiency in the delivery of services.
Ulrich et al. (2008) suggest that in line with creating value for an organisation, the HR
function needs to operate as a business within a business; examining the functions
value-adding potential with respect to its structure. The study was conducted primarily
in North America with references made to India, China, Germany and Eastern Europe
and was based on survey results reported in other studies1; for example, a survey of
800 senior HR professionals in Germany. The study posits that the function can
deliver value on two premises. First, the HR organisation needs to be structurally
1
Reilly et al., 2007, Deloitte Consulting, 2006; Mercer Human Resource Consulting, 2008;
Chartered Institute of Personnel and Development [CIPD], 2005; Ulrich and Smallwood,
2004; Ulrich and Brockbank, 2005.
53
aligned with the organisation structure of the business. Second, given the diversified
and allied business models prevalent in organisations, HRs structure of delivery
should incorporate five areas of response, namely: service centres, corporate HR,
centres of expertise, embedded HR, and operational HR. Further, the authors suggest
certain steps to successfully implement this structure like diagnosing and aligning HR
strategy with the business-level strategy and differentiating between transactional and
transformational work.
A key debate in extant literature centres on the need and utility of generalist and
specialists in the HR structure. Caldwell (2003) posits that restructuring of the HR
function due to concerns of cost, value and service delivery, forces discrete HR
functions to be sub-divided into specialist and generalist/consulting tasks. In addition,
research conducted by CIPD (2006; 2007) highlights that the HR function in small and
less complex organisations is comprised of integrated HR teams in which generalists
perform a full range of tasks, providing support for all kind of HR activities.
54
Conversely, the HR function in large and more complex organisations adopts a more
specialist focus based on specific work areas such as training and development,
recruitment and selection, reward and compensation or employee grade or group such
as managers and non-managers.
One of most discussed structures addressing the specialist / generalist debate is that
prescribed by Ulrich (1997), which proposes the adoption of the HR shared services,
centre of expertise and the business partner elements. This structure is widely cited as
the three-legged-stool model which is considered more suitable for large organisations
that are more complex and have a greater degree of specialization (CIPD, 2007). This
structure is a combination of administrative working manifested in the shared services
centre, strategic contribution vested in the relationship managers who work as
business partners and specialist focus provided by the embedded HR experts in
particular HR areas of expertise. The model is elaborated in the paragraphs below.
Related to the business partners, Ulrich and Brockbank (2005) emphasise that they
work with the line managers to help them reach their goals, through effective strategy
formulation and execution which aids in developing a better understanding between
the HR and the business units. The term Business Partner is used interchangeably
with strategic partner (Francis and Keegan, 2006) and this role is defined as the
understanding by the HR professionals of how HR fits with and supports the
organisations mission, strategy and processes. The multiple dimensions of a strategic
business partner role include the business expert, change agent, knowledge manager
and consultant. Further, Ibid. (2005) indicate that the HR function is facing a dilemma
of either continuing its specialist role or take on a business partner role. The latter
requires repositioning of the department and performing new roles along with gaining
acceptance of the line mangers.
Developing the position of business partners involves establishing senior HR
managers, often referred to as generalists, in most of the key business units of the
organisation. This generalist role of HR acts as an interface between the HR function
and the business units. Caldwell (2008) posit that business partners are appointed at
departmental and/or regional level to perform operational tasks with a local linebusiness focus but in doing so, no single model is followed.
Hence, several
Pickard (2004) and Ulrich and Brockbank (2005), the HR strategic partner employs
their knowledge of business, change, consulting and learning to their relationships
with line managers. They provide consultancy to line managers through strategy
formulation and execution, which aids them in reaching their goals.
Reilly and
Williams (2006), add that in order to perform the business partner role, the HR
professionals must have business knowledge, professional capability, HR expertise
and generic management skills.
Further, Kochan (2004) and Lemmergaard (2009) state that although the strategic role
is a reflection of the changing realities, but merely changing the structure of the HR
function may not be enough to make it a strategic partner. Albert (2003) conducted a
survey and compared the result with their previous survey of 1995 and 1998 to find
the trends in the adoption of the business partner role. The results indicated that the
greatest contribution of HR occurred when HR played a strategic business partner role
that fully involved itself in both the formulation and implementation of strategy.
Cleland et al. (2000) have claimed that the role of the business strategist would
inevitably be expected from the HR function in future.
Related to the element of HR shared services, Armstrong (2009) and Ulrich (1995)
state that they are responsible for transactional/administrative work which includes,
recruitment, administration, pension and benefits administration, payroll and absence
monitoring and discipline and absenteeism. Ulrich et al., (2008) highlight that the
shared service centres emerged in the late 1990s as HR leaders realized that
administrative tasks are more efficiently performed in a centralised, standardized way.
They identify the achievement of a greater degree of structural flexibility to respond to
business change as the strategic reason for setting up HR shared services. There is
also a trend towards taking over the entire HR function from other client firms to
deliver complete outsourcing of HR services. This trend is being observed especially
among large firms. Proponents of reconfiguring the HR structure with the addition of
HR shared services centre believe that it brings the benefit of integrating a total
solution approach to problems; through recentralisation of the HR function (one stop
shop). Thus, according to Cooke (2006), Torrington et al., (2011), Farndale et al.,
(2009) and Redman et al., (2007), setting up an HR shared services centre often
56
Boglind et al. (2011) in their work on shared services argued that the essential driver
for shared services is improved productivity because the right number of people are
employed, work processes are reengineered and better services are delivered through
technology. The introduction of shared services for the HR department offers not only
cost savings and greater efficiency but also provides the HR function with an
opportunity to focus on more strategic issues. This gives HR the freedom to engage in
activities that may maximize the return on human capital investment. Roebuck (2008)
states that the credibility of HR is based on the delivery of the core transactional HR
services and hence shared services must perform these at a high-quality level.
Further, our review of literature highlighted that challenges may occur in the
implementation of regional or multinational approaches towards shared services, with
varying factors like demographics, culture, language, infrastructure, consistency in
programs/ processes and availability of expertise, which need to be catered for in the
model. The major challenges to implementing shared services (or its drawbacks) are a
major loss of control, budgetary concerns, technological problems and possible
disruption in work patterns.
Related to the centre of expertise which specialises in providing high level advice and
service on the HR activities, the literature reviewed highlighted that the most common
HR activities performed at the centre were associated with training and development,
recruitment, reward, and employee relations (CIPD, 2007).
57
The following
Lawler III and Mohrman (2003) posit that HR managers must have competencies that
espouse business and strategic orientation so they can perform activities related to
strategy development and they can contribute to organisational design and change
management. Competency has been defined by Ismail and Long (2009) as a personnel
related concept referring to a set of behavioural dimensions of ones effective
performance at work.
characteristic of an employee (motive, trait, skill, aspect of ones self image, social
role, or a body of knowledge) which results in superior performance. Additionally,
the changing HR personnel role has altered the jobs of HR professionals, as well as the
expectations of the tasks HR needs to perform. Thus, HR personnel need to either
develop, or acquire the requisite knowledge, skills and experience to assume a new
range of roles in order to operate in a sensitive, political and highly competitive
business market while demonstrating added value (Tamkin et al., 2006).
58
Further, our review highlighted that based on the multiple roles performed by the HR
function (HR leader, senior business / unit generalist, HR specialist / experts at the
centre of expertise), different HR competencies become critical.
Some key
competencies emerging from extant literature (Brockbank and Ulrich, 2003; Ulrich
and Brockbank, 2005; Tamkin et al., 2006; Caldwell, 2003; 2008; Boselie and
Paauwe, 2004)) include business knowledge, customer orientation, effective
communication, credibility and integrity, systematic perspective and negotiation and
conflict resolution skills.
competitive issues impacting the business like market, products, technology, processes
and to understand how a business can create profit and add value.
Thus, HR
understanding of how firms are integrated (value chain) and how they create value
(value proposition).
Customer orientation is the ability of viewing issues from the perspective of the
customer while effective communication is the ability to provide both verbal and
written information clearly, consistently and persuasively. Credibility and integrity is
the capability to walk what you talk, act with integrity in all business transactions,
honour personal commitments and achieve results. The systematic perspective is the
ability to view problems and issues in the context of the bigger picture and to
understand the interrelationships among subcomponents.
conflict resolution skills are the capacity to reach agreements and consensus in spite of
different goals and priorities.
59
Business and finance savvy skills are also essential as they aid in
understanding the financial reports, business goals and other support functions.
Critical thinking skills which contribute in strategy, vision and formulation gain them
creditability and HR professionals should be sound in information communication
technology (ICT), which is cited as a factor of sustained competitive advantage. This
is because the ability of the HR professional to apply technology can improve the
firms efficiency and effectiveness. Additionally, deep knowledge of HR policies and
processes, commitment to change and the ability to diagnose the effectiveness of the
organisation to take corrective actions are also essential competencies. However,
despite the prescriptive utility of these frameworks, Caldwell (2008) posits that
competency models have been perceived to be effective in the selection of business
partners but not in their development.
Also,
Bjorkman et al. (2012) define IHRM more broadly to include the management of
people in alliances and joint ventures, the role of HRM in MNEs / MNCs and the
global configuration of the HR function. The culture of Pakistan is characterised by
researchers as centred on groups (Lyon, 1993), with large power distances between
social elites and non-elites; where status is of primary concern with a collectivist
orientation (Khilji, 2001). It is concluded that this authoritarian pattern is largely
reflected in companies and the social dynamics prevailing within them. In the case of
large public sector organisations, HR-related decisions are made by committees
composed of government nominees (Klein, 1992) that flow top-down, with little to no
room for disobedience. However, from 1990s onwards, government-led privatization
60
sought to revamp these organisations, notorious for their political culture, low
performance and weak people management policies (Mirza, 1995).
It is argued that this liberalization of the economy sparked an ongoing change in the
Pakistani management perspectives (Khilji, 2002), and brought in a new value system
to the way business was done. This value system is underpinned in the Americanstyle management syllabi, work culture and so forth (Khilji, 2003). It is argued that as
a result of these changes, the Pakistani corporate sector became more receptive to the
new paradigms of human resource management. Ibid. (2003) also find that companies
recognize the need to develop the new culture in order to remain competitive.
Additionally, post deregulation in Pakistan (since 2000), the emergence of starkly
diverging values in the labour force emerged with regards to their expectation of HRM
delivery (Khilji, 2004). The study shows two distinct values to have emerged; those
rooted in tradition (national values) and those reflective of a modern market-driven
economy (work-related values). The study concluded that the younger cluster of
employees surveyed experienced a transition in their value system towards work
related values. The implication for HRM then is, to design and deliver revamped HRM
practices to organisations that are becoming increasingly sophisticated in their
expectations of the function itself, placing an implicit demand on senior management
to make the fulfilment of these expectations a prerequisite to deriving greater HR
satisfaction and commitment.
Further, a study by Khilji et al. (2010), analysing the use of impression management
strategies amongst Pakistanis, Indians and Israelis, found that Pakistanis are more
prone to employ these impression management strategies than their counterparts.
Using the Scheffe multiple comparison analysis, the results showed that Pakistanis
relied more heavily on relationship-focused strategies as opposed to job-focused ones,
and displayed far more initiative in doing so. Furthermore, Pakistans government
acknowledges the fact that recent labour market trends tend to emphasise the need for
human resource development (HRD), in order to mitigate the vulnerabilities faced by
the labour force. Government rhetoric also addressed the need to create full and
productive employment and decent work for all 3 , as a spill over of the current
61
economic situation that has further widened the gap between the working-rich and
working-poor.
Much study has also been undertaken globally, to examine the relationship between
HRM and organisational performance. A study of this interconnection in Pakistan
(Khilji and Wang, 2006) aimed to illustrate how human resource satisfaction (HRS)
serves as a mitigating factor in employee turnover. It highlights that HRS had a
negative influence on turnover intention, with age, gender, organisation type and
organisational performance all serving as moderators. The study also noted that a
stronger HRS-turnover relationship existed among younger employees.
Further, As Locke and Thelen (1995) posit that the degree and direction of influence
of culture bound factors on HRM varies from region to region. Pakistan and India
share a long history prior to their independence in 1947 due to which their social and
cultural set up bears much resemblance. To cover for the lack in availability of
relevant published literature in the context of Pakistan, studies conducted in other
Asian countries are reviewed; they will serve as a good starting point for our research.
Budhwar (2004) posit that the existing literature on Asia generally focuses on other
advanced countries in the region such as Singapore, Hong Kong and Taiwan while
ignoring to a large extent, other emerging economies in the region.
India and Pakistan have seen massive deregulation of the economy during the 1990s
and thereafter (Khilji, 2000; Budhwar, 2003), with clear implications for the HRM
function in general and HR practices in particular (Ibid., 2000; Budhwar, 2003). Some
of the changes that have taken place include the replacement of a life time
employment contract introduction of PRP compensation and a greater structured
approach to HRM (Budhwar and Khatri, 2001). Similarly, Budhwar (2000) highlights
that liberalization, change in economic policies and the competition which comes as a
consequence of increased operations of overseas firms in India, places immense
pressures on the personnel function in domestic (Indian) organisations that face
demands to prepare and develop employee skills, efficiency and effectiveness. This
has also resulted in the creation of an HRD ministry in the central government, the
setting up of HRD departments in organisations and academic institutions and the
development of professional institutions which offer training and development
62
Also, Zhu et al., (2012) found that external pressures were the common impetus for
changes in HRM practices. This study on China illustrates the effects of competitive
pressures that caused the country to evolve from paternalistic socialism to market
socialism, even among state-owned enterprises which had extensive legacy systems.
Moreover, a parallel view holds that HRM has developed globally keeping in view the
unique differences in operating environments. For instance, it is argued that HRM in
Europe developed on different lines than the US, owing to unique European features
such as more limited individualism and a greater role of the state (Brewster, 2007). A
63
study on the Spanish banking sector (Pea & Villasalero, 2010), illustrated that despite
the universalistic pressures on the sector to adopt certain predictable HR practices,
firms benefitted instead from linking their HRM systems with their unique business
strategies.
Another related and perhaps appropriate context for the study is that of the Middle
East region which bears religious similarities. Studies by Ali (2004) and Robertson et
al, (2001) posit that religious semblance can influence and impact the development of
HR system. The studies are also relevant because like Pakistan, HR systems are still
being structured in these countries, as is the case in most developing countries (Debrah
and Budhwar, 2004; Budhwar and Mellahi, 2007). An analysis of studies in the
context of various countries like Oman, Saudi Arabia, Iran and Egypt shows that
4
Report of the Indian Committee on HR Issues of Public Sector Banks (June 2010)
64
research in the area of HR is very scarce in the region and studies that have been
conducted are exploratory in nature. Thus, they aim to study the development of the
HR systems broadly, rather than focus on specific HR practices.
This can be
attributed to the lack of resources for research, problems in data gathering and cultural
limitations (Al-Hamadi et al., 2007).
Evidence from studies conducted in various Middle Eastern nations shows some
influence of religion on HR practices in general, but in the case of compensation there
is considerable variation between countries. Namazie and Frame (2007) studied 14
organisations in the public and private sector of Iran and found varying practices and
strategies being implemented there. Moreover, there is also a difference between the
practices of MNCs and private Iranian firms. By law all firms, be they foreign or local
must conform to the Iranian labour laws and it was noted that local organisations had
gradually started to structure their HR systems taking a lead from the success of
MNCs operating in Iran. Similarly, an investigation into the Egyptian HRM practices
by Leat and El-Kot (2007), showed the influence of religious, contextual and
institutional variables in the way the HR function operated and the policies / practices
it designed. The investigation was undertaken on a sample of 58 Egyptian companies.
Further, it revealed that due to the influence of western management practices which
encourage masculinity and individualism, and introduce the concept of employee
productivity, there was a shift in the HRM practices in Egypt which gave preference to
performance over seniority / experience.
2.7. Conclusion
This research aims to examine the current state of the HR function in the case-study
organisations in Pakistan with a specific focus on the role performed by the HR
function. The research is conducted within the framework of the indicators which
provide evidence of the presence of a strategic role (or otherwise) of the HR function
and the factors that influence (impede / facilitate) the adoption of a strategic role.
These factors / elements include devolution, the structure of the HR function and the
skill-set of HR personnel. To position the research in the context of Pakistan, county
and sector specific factors which include the corporate culture, socio-economic
demographics and political situation (see chapter 3) are also factored into the research.
The research questions that are informed by this literature include:
65
1. What is the current state of the HR function in the banking sector of Pakistan
and to what extent, if at all, is it performing what can be termed a strategic role?
2. How has the devolution (if at all) of particular HR responsibilities to line
managers, influenced the HR functions intent to attain a strategic role
orientation?
3. How have the characteristics of the HR structure and the HR skill-set
influenced the strategic role orientation of the HR function?
The primary objective of the literature review was to study the HR function and the
evidence of the presence of a strategic HR role by focusing on the evolution of the HR
function, the emerging HR roles (role typologies) and the indicators which provide
evidence of the presence of HR roles. Additionally, we analysed relevant literature on
devolution, structure of the HR function and skill-set of HR personnel, which enabled
us to identify the inherent but indistinct linkages between these factors / elements and
the role orientation of the HR function. The following paragraphs elaborate and
identify the essential ideas, key debates and theoretical gaps that emerged from this
review.
assimilating the disparate factors in one study, with the aim to capture a holistic and
comprehensive understanding of multiple, yet interlinked indicators that can provide
evidence of the presence of a strategic HR role (or otherwise).
the reasons that underpin such conflicts and thus either impede or facilitate the process
of devolution.
The investigation into the prescriptive and empirical literature on the structure and
skill-set of the HR function revealed certain tensions. Firstly, despite the prescription
of a division in the specialist and generalist responsibilities of HR, empirical literature
is inconclusive on the benefits that can be derived from such a structure. Secondly,
the role of the business partner is considered by certain authors as the future of the HR
function, yet how it contributes strategic value is still being debated in empirical
research without much conclusive evidence. Some researchers have pointed to the
problems that are created due to the institution of such a role. Thirdly, the range of
skills for HR personnel identified in literature is quite extensive and appears to lack a
causal link with the strategic HR role. By addressing these tensions in our research,
we attempt to evaluate the influence of the HR structure and skill-set of HR personnel
on the role adopted by the HR function.
Hence, this review of literature informs our research in the following ways. Firstly, in
line with our research agenda, we developed a preliminary understanding of the
subject understudy. Not only did we identify the themes, debates, antecedents and
implications of the strategic HR role to be performed by the function, we highlighted
the empirical trends as reported in literature. Secondly, the gaps within theoretical and
empirical literature were identified. Finally, by conducting a multi-faceted review on
the evolution of the HR function, the indicators which provide evidence of a strategic
role, the influencing factors and their contribution towards impeding or facilitating the
adoption of a strategic role by the HR function and HRM in Pakistan, we developed a
comprehensive and integrated framework for our research. It is hoped that this
integrated approach to researching the HR function and its role will add to the debates
in international HRM on the state of the HR function and its role in Pakistan, more
specifically the case-study organisations (see figure 2.1).
68
Strategic indicators
HR Head profile, CEO support, HRs initiatives, HRs alignment
with strategy, HRs involvement in strategy formulation
Banking
sector
Devolution
HR Structure
Influencing factors
69
HR skill-set
Organisational
contingencies
This chapter is divided into six sections. The first three sections attempt to capture
the country specific information while the later sections sketch the dynamics of
the banking sector. Section one briefly highlights the demographic statistics of
Pakistan and describes the current economic position through an analysis of
various economic indicators. Section two discusses the labour statistics and
focuses on the initiatives taken at the government level to enhance the literacy rate
and to produce a skilled and professional labour force. Section three elaborates on
the socio-cultural factors that have led to the creation and development of a
distinctive corporate culture in Pakistan. Section four introduces the banking
sector of Pakistan through a description of the various stages of its development
and section five highlights the role and influence of the banking regulator (State
Bank of Pakistan, SBP) in introducing and monitoring the reforms. The last
section evaluates the character of privatization reforms on the banking sector with
a focus on the implications for the employees and the Human Resource Function
in particular, which is followed by the conclusion.
70
A review of the economic conditions in Pakistan shows that the economy was
dominated by the agricultural sector in the past but over the last few years the
services and manufacturing sectors have grown significantly and were a source of
development for the economy (Alam, 2010). An examination of other significant
economic indicators reveals that the official unemployment rate over the past five
years has averaged at six percent but this should not be considered as a good
indicator of unemployment as a significant number of people included in this
percentage are engaged in the informal sector. Also investment as a share of the
GDP was high, up until 2005 due to many fiscal adjustments and privatization of
the telecommunication, banking and energy sectors.
To fully understand the economic situation in Pakistan view briefly review the
major economic indicators and their trends including GDP per capita income,
foreign direct investment (FDI) and inflation.
figures below and their related trend information are multiple Economic Surveys
published by the Ministry of Finance in Pakistan6.
5
71
The GDP of Pakistan showed significant growth from 2002 to 2005 (figure 3.1)
due to the stable political and economic policies in addition to the good output
from the services sector, especially the financial sector. However, a sudden
decline in the following years is attributed to the rising energy prices along with
the economic problems caused in the past, by the 2005 earthquake which took its
toll on the rescue and rebuilding efforts. Despite these problems, growth in the
service and industrial sectors (specifically construction) between the years 20052007 helped in maintaining some degree of growth (Alam, 2010). The continuous
reduction in the growth rate from 2007 onwards until 2009 is attributed to the law
and order situation, power outages and the consequent loss of working hours. The
decline of exports, the expensive war on terror and the rise in oil and commodity
prices during the years 2008 and 2009 worsened the economic conditions further.
From then on until 2012, the role of the agricultural sector and the service sector
(figure 3.2 and Table 3.1) helped to improve the GDP rate in the country.
Figure 3.2: Contribution of different sectors to the GDP of Pakistan (%)
72
Additionally, the tensions in the political arena are still translating into the low
economic growth rate but some efforts to improve the structural deficiencies such
as those related to human resource development, privatization of state-owned
enterprises and legislation related to taxation helped Pakistan in 2011-2012 to
recover somewhat from the otherwise deepened economic crisis (Economic
Survey, 2012). It should be noted that some of the issues confronting Pakistan on
the economic front are a direct result of the global economic crisis which include
the rise in international oil prices, the financial crisis and the higher costs of doing
business.
Figure 3.3: Per capita income ($) of Pakistan
73
The second economic indicator, the per capita income7 (see figure 3.3) showed a
positive growth trend with an increase from USD 724 in 2004-05 to USD 1,372 in
2011-12. This increase is attributed to the rise in real GDP growth, worker
remittances and a somewhat stable exchange rate. The third economic indicator,
Foreign Direct Investment (FDI) is stated to be a key factor in the improvement of
economic conditions, especially in developing countries (Hussain and Kimuli,
2012). However, countries with a stable economic environment, availability of
skills and a well-structured financial sector are found to attract more FDI than
others. In Pakistans case, FDI has steadily decreased from 2007 onwards (see
table 3.2), and Pakistans telecommunication sector appears to be the most
significant recipient of FDI in-flows with the financial sector close behind in
second position. This is because of the extensive liberalization and privatization in
these sectors (Khan and Khan, 2011). The overall decrease in FDI is attributed to a
number of factors which include the global economic crisis, lack of a stable
infrastructure (especially in the energy sector) and the overall political instability
in the country.
Table 3.2: FDI inflows in Pakistan ($ millions)
Year
Greenfield
Privatisation
Total FDI
Private
Investment
Proceeds
2001-02
357.00
128.00
485.00
-10.00
2002-03
622.00
176.00
798.00
22.00
2003-04
750.00
199.00
949.00
-28.00
2004-05
1,161.00
363.00
1,524.00
153.00
2005-06
1,981.00
1,540.00
3,521.00
351.00
2006-07
4,873.20
266.40
5,139.60
1,820.00
2007-08
5,276.60
133.20
5,409.80
19.30
2008-09
3,719.90
0.00
3,719.90
-510.30
2009-10
2,150.80
0.00
2,150.80
587.90
2010-11
1,634.8
0.00
1,634.8
344.5
2011-12
812.6
0.00
812.6
(46.9)
2012-13 Jul-Jan.)
525.1
0.00
525.1
137.1
Total
23,864.0
2,805.60
26,669.6
2,759.4
Portfolio
Investment
Measured as Gross National Product at market price in dollar term divided by the countrys
population
74
As can be seen from the statistics below (table 3.3), Pakistan was able to curb the
inflationary trend in 2010 through its strict monetary policy; also the latest
economic survey of Pakistan (2012) forecasts that inflation might decelerate to
some extent due to better output in the agrarian market and the streamlining of the
supply chain factors. At a global level, steps are being taken to lower commodity
prices but the implications for Pakistan will only be positive if it strengthens its
output, attracts valuable investments and cooperates with other nations at a regional
level to cater for the growing population of the country.
75
(II)
76
2005- 06
2006-07
2007-08
2008-09
2009-10
2010-11
Labour
50.05
50.33
51.78
53.72
56.33
57.24
Employed
46.95
47.65
49.09
50.79
53.21
53.84
Unemployed
3.1
2.68
2.69
2.93
3.12
3.40
force
Of the 180 million population, the total formal registered labour force consists of
57.2 million people, of whom 53.84 million people (see table 3.4) are employed
and 3.4 million are unemployed with a total unemployment rate of 5.9%. The
agriculture/forestry/ hunting and fishing sectors generate the most employment in
the country and are closely followed by the manufacturing sector. The former
cluster of sectors and community/social and personal services sectors are the two
areas where the participation of female workers is higher than male workers (see
table 3.5).
Further according to the Economic Survey of Pakistan (2012) the country exports
a large percentage of its skilled and unskilled labour force to other countries such
as the UAE, Europe and Canada. The statistics show that approximately 1.6
million workers are registered for overseas employment and almost 45% of these
77
are unskilled labourers while the remaining are either highly skilled or skilled.
Overseas employment is considered as a reason for the brain-drain Pakistan is
experiencing since many highly skilled workers pursue opportunities abroad.
According to Sajjad (2011), in order to battle this intellectual brain drain, Pakistan
introduced policies to attract these professionals back into the country. Examples
are policies of the Higher Education Commission of Pakistan (HEC), to hire
foreign faculty members (Pakistan origin), to introduce new and innovative ideas;
also, research networks were established to invite expatriates as consultants, to
train the faculty.
The literacy rate in the country is currently 58% (see table 3.6) with Urban areas
ahead of the rural areas. The urban literacy rate is 74% compared to 49% in the
rural areas. Additionally, the gender literacy gap is wider in the rural areas where
only 35% females are educated as compared to 63% of the male population. In the
urban areas the difference in male and female literacy is 14%, with the male
population being more literate. Moreover, the 2009 National Education Policy set
an ambitious target of attaining an 86% literacy rate by the end of 2015 but the
primary obstacles are low literacy areas in rural Sindh, Baluchistan and Khyber
78
Pakhtunkhawa. The policy intends to upscale the ongoing programmes which are
focusing on increasing literacy in adults and non-formal education to achieve the
universal primary education objectives by reducing the dropout rate. Further, the
HEC is focusing on increasing the higher education rate in the country by
sponsoring a large number of Pakistanis to obtain education in highly reputed
foreign universities in all major disciplines like computing, basic sciences, social
sciences, engineering and business management. A number of scholarship
programmes have been initiated for this purpose and a strong focus is placed on
increasing the number of PhDs in the country. Table 3.7 shows the statistics of
individuals who have proceeded abroad through HEC programmes.
a close knit family structure with the senior males being the head of the household
and the family providing the basic support system for individuals. The importance
79
of keeping face is very high and respect for ones religious and cultural traditions is
also high. There is a strong dependency on the male head of the family who is
expected to be the breadwinner of the family (Khilji, 2003). Women are
traditionally expected to be the home-makers but a considerable percentage of the
Pakistan female population is now engaged in the employed labour force because
of the growing inflation and expenses. A strong kinship culture is dominant in the
society because of the prevailing collectivist culture and a high power distance
which often promotes nepotism (Islam, 2004).
Further, the corporate culture and the way HRM is organised plays an important
role in understanding how business is conducted in a particular country.
Multinational corporations (MNCs) play an important role in shaping the
organisational culture (Khilji, 2003); this holds true not just for Pakistan but
MNCs can affect the way businesses are conducted in any developing country,
according to Reiter and Steensma (2010) and Caves (1996). MNCs bring in FDI,
expertise, technology and new employment opportunities for the host country
which can improve the economic environment. Pakistans FDI is directly linked,
among other macro/micro economic factors to the quality of the human capital in
the country (Hakro and Ghumro, 2011).
80
Khilji (2003) and Qureshi (1994) suggest that senior management develops and
applies HRM practices without consulting the employees as the corporate culture
is quite assertive and competitive where authority figures are highly respected.
Khilji attributes this behaviour to the elitist culture present in companies where
those in power are protected. Thus, there is a high power distance which is
supported by Harris et.al (2003) which highlights that, in Hofstedes (1991)
cultural dimensions, Pakistan is high on power distance and uncertainty avoidance
and medium in masculinity. While significant power distance also exists in other
countries of the world like Singapore, Malaysia, Philippines, and Thailand
(Torrington and Huat, 1994), in Pakistan, power distance is most apparent in the
gap between middle and lower management and the top management.
This
power distance and masculinity also create communication gaps within the
hierarchies that sometimes result in distrust amongst managers and employees.
Further, there is a lack of motivation for senior employees to train new employees
and overall, the implementation of merit based recruitment (preference to
referrals) and training strategies is ineffective (Irshad and Toor, 2008).
In Pakistan, the financial sector has contributed to the economic well-being of the
country since the countrys inception in 1947 (Zaidi, 2005). The sector includes
commercial banks, specialized banks (Islamic banks, investment banks and
agriculture banks), national saving schemes, insurance companies, stock
exchanges, leasing companies, development finance institutions, corporate
brokerage houses and microfinance institutions. From amongst these sub-sectors,
the banking sector, on which our research focuses, currently performs three main
functions which include the mobilization of savings, the facilitation of a payment
81
Economic Forum report (2009), banks in Pakistan constitute for 95% of the
financial sector and the country is ranked 48 in financial stability and 46 in banking
soundness and health from amongst 55 countries included as the unit of analysis in
this report.
The recent history of Pakistans banking sector can be divided into three distinct
evolutionary stages, namely pre-nationalization (1947-1974), nationalization
(1974-1991) and privatization and deregulation (1991 onwards).
Each stage
presented different challenges for the development of the banks in both financial
and management terms. After its independence in 1947, the first issue the State
Bank faced was the creation of the national banking system for which it
recommended the institution of a banking institution to serve as an agency to the
State Bank. This resulted in the establishment of the National Bank of Pakistan
under an ordinance in November 1949; this bank became sufficiently strong by
1952 to take over the agency function previously performed by the Imperial Bank
of India. Further, in 1962, a comprehensive banking law was formulated to guide
the development of the banking industry and to ensure that the interest of the
depositors was guarded.
requirements of the 21 influential industrial and feudal families, who had by then
started to dominate the economic activity in Pakistan (Baig, 2000)
The state owned banking sector faced many problems as it was protected from
competition, had budgetary constraints and suffered from significant political
influence. These problems included over branching, high administration costs, poor
customer service, over-staffing, poorly trained human resource,
under-
was launched by the Government of Pakistan under which the Nationalization Act
was amended and the ownership of the banks started shifting from the public to the
private sector.
implemented. According to Khan (2007) this policy was aimed at enhancing the
performance and strengthening the position of the banking sector.
In Pakistan, banks were privatized for two reasons: (i) to improve the efficiency of
the banking sector and; (ii) to meet the requirements for funding by The World
Bank and the International Monetary Fund (IMF) (Nawab et al., 2010). They add
that the aims of privatization included improvement in the operations, allocation of
resources due to greater competition, reduction in the political influence which had
introduced inefficiencies and strengthening of the weak corporate governance
structures.
Allied Bank was not bought by a strategic partner but was instead sold to the
management by offering employee stock ownership plans. In September 1991,
about 26% of shares were sold to ABL employees and in August 1993 another 25%
shares were sold to ABL management. In parallel with the privatization policy, the
government also started deregulation of the banking sector due to which ten new
banks were given licenses to start their operations in 1991 (Baig, 2000).
In addition, to ensure smooth transition of the public sector banks to the private
sector, professional bankers from the private sector and foreign banks (within
Pakistan and abroad) were appointed to restructure the banks and to prepare the
ground work for privatizing the. The Banking Companies Ordinance (1962) and
the State Bank of Pakistan Act (1956) were reinstated to restore the powers of the
central bank that strengthened its control and supervision of the banks and ensured
the development of corporate governance frameworks for the banks. After the
introduction of the reforms, banks were allowed to lend to small private enterprises
and to introduce new segments, products and services like consumer banking and
mortgage financing (Hussain, 2005).
84
2002
1990
2002
Share in percentage
1990
2002
Assets
Public
Private
392.3
16
877.6
92.2
968.3
41.3
45.5
Foreign
17
17
33.4
280.9
7.8
13.2
Total
24
38
425.6
2126.8
100
100
329.7
721.9
93
43.5
Deposits
Public
Private
16
754.2
45.4
Foreign
17
17
24.9
184.1
11.1
Total
24
38
354.6
1660.2
100
100
3.5. The role of the State Bank of Pakistan during the privatization stage
Here we discuss the initiatives undertaken by the State Bank of Pakistan to
strengthen the operational and management capacity of the banking sector. The
initiatives broadly fall under three categories, namely operational reforms,
management reforms and regulatory reforms.
introduced by the SBP to ease the process of privatization in the banking sector and
as a first step it focused on restructuring the banking operations and deregulating
the sector (Akhtar, 2007). As a consequence of the deregulation policy, in 1990
the SBP reduced the barriers for entry of new banks and issued a large number of
licenses which allowed foreign banks to establish local subsidiaries while keeping
a strategic holding of 49% shares. The SBP also made compulsory an investment
of USD 5 billion for foreign banks to initiate their operations and they were
allowed to fully own their subsidiaries. As highlighted in chapter two, the foreign
banks had far reaching implications for the domestic banks in terms of the HR
policies, procedures / processes and systems.
In the category of operational reforms, the SBP removed the ceilings and floors on
the interest rate and abolished the concessional lending schemes from which the
elite feudal and 21 influential families had benefitted in the nationalization era.
85
According to Akhtar (2007) and Hussain (2005), for the facilitation of debt
recovery, the State Bank of Pakistan in collaboration with the Government of
Pakistan established the Committee for Revival of Sick Industrial Units (CRSIU)
and the Corporate and Industrial Restructuring Corporation (CIRC).
Further, to expand the reach of the banking sector to the under privileged / under
represented sectors and segments of the society, the SBP took measures to
encourage microfinance banking and Islamic banking. The SBP supported the
microfinance ordinance 2001 and provided strict regulation and legal framework
for the microfinance banks. Till now the SBP has allowed operations of six
microfinance banks and has supported Islamic banking by allowing five Islamic
banks to operate as specialized banks.
commercial banks to diversify into new product markets like Islamic banking and
to target low income depositors and small investors / entrepreneurs.
Further, a detailed set of guidelines on risk management were issued by the SBP to
provide guidelines to banks in securing themselves from risks; these guidelines aid
in identifying, measuring, monitoring and controlling risks (SBP, 2007; Akhtar,
2007). To enhance operational efficiency, the SBP introduced technology into the
banking operations which optimized the performance of the banks.
The
technological initiatives included putting the Credit Bureau online and providing an
e-solution to reconciling the gross settlement in real time (RTGS), establishing a
shared ATM network and e-clearing house and the introduction of online
automated branches to collect utility bills, payments and remittances which
reduced both time and cost for the customers and the banks.
2006). Further, to increase the transparency in the banks, the SBP ensured that the
code of ethics and other corporate governance reforms was followed in accordance
with the International Accounting Standards and it directed banks to release
financial statements to the public on a quarterly and half yearly basis.
In the category of regulatory reforms, the Committee for Revival of Sick Industrial
Units (CRSIU) and the Corporate and Industrial Restructuring Corporation (CIRC)
were formed to regulate the recovery of non-performing loans; as a consequence
debt amounting to Rs. 15.1 billion was recovered.
National Accountability Bureau (NAB) was established in the SBP to process the
cases of wilful defaulters.
disposal of bank default cases, the SBP passed an anti-money laundering law and
introduced a new corporate bankruptcy law (Akhtar, 2007).
has started banking surveillance to keep a strict check on the banks and for the first
time in the history of Pakistan the banking license of one of the commercial banks
which was found in violation of the prudential regulations and norms was cancelled
after following due process (SBP, 2010).
Under the reforms, five public sector banks launched their voluntary separation
schemes and approximately 21,996 bank employees were released under these
schemes, between 1997 and 2003 (Khan et al., 2011).
The overstaffing in
branches, over the years was due to the pressure placed by the ruling political and
feudal elite who got their own people hired in the banks.
In return, these
individuals patronized them (politicians and feudal), by sanctioning their loans; this
87
These reforms transformed the banking sector into an effective and competitive
one; according to a World Bank report, the banking sector in Pakistan is given
second rating in performance amongst South Asian Countries. Further, according
to (Saleem, 2009), Pakistans banking sector has remained remarkably strong and
resilient, despite facing pressures emanating from weakening macroeconomic
environment since the late 2007. Fitch Ratings (Ibid., 2009) describe that the
Pakistani banking system has gradually evolved from a weak state-owned system
to a healthier and active private sector driven system over the last decade.
However, in 2008 due to the overall decline in the economy and growth rate of the
country, the banking sector witnessed a slowdown in its growth rate and in October
2008, the deposits fell to Rs. 3.67 trillion.
A total of 12 mergers between various banks took place between 2000 and 2005
and a total of 40 mergers have taken place till now (Hussain, 2005). The SBP
facilitated the merger and acquisition of small struggling and sick banks and many
foreign banks, for financial stability. This led to a change in the banking sector as
the number of private banks increased and the number of state owned and foreign
banks reduced. According to Khan et al. (2011) these mergers and acquisitions
aided banks to meet the requirement of minimum paid up capital but they lead to
downsizing causing low employee motivation levels.
In the last decade (2000-2010) the banking activities expanded in four major
sectors. These include corporate, small to medium enterprises (SMEs), agriculture
and consumer banking (SBP, 2011). This review reports that the support provided
to SMEs was due to their contribution to employment generation, poverty
alleviation, GDP growth and their success rate in other developed countries. A
Small and Medium Enterprise (SME) Bank was established to develop new
products and programmes for loans and new credit appraisal and documentation
techniques. Additionally, agriculture is an integral part of Pakistans economy as it
88
Later, (in 2007) with the on-set of the global financial crisis and political unrest in
the country, the banking sector became stagnant and economic growth declined; to
contain costs in this environment, the large banks trimmed their workforce to lower
their operational cost. For example, one public sector bank brought the average
number of employees per branch down from 9.8 to 8.8 in 2009 and another
decreased it 12.5 from 16.7. However, the private domestic banks and foreign
90
banks that were following a growth strategy and were not overstaffed, raised the
employees per branch, hired new employees and opened new branches and their
business focus shifted from urban to rural areas.
New universities and colleges were issued charters and the Higher
determine
employee
retention
and
satisfaction,
especially
in
the
Telecommunication, Oil and Gas and Banking sectors of Pakistan. Khilji and
Wang (2006), Khalid, (2006) and Khan et al., 2012 support this view and state that
the most powerful indicator of good employee performance in the banking sector
91
of Pakistan were the emerging effective HRM systems that built an environment of
trust, support and commitment for the employees, through good leadership, merit
based systems and fair policies. They add that many banks in Pakistan, regardless
of their ownership, implement quite similar HRM policies that are considered the
best practices implemented in the west. However, even the presence of these
policies did not ensure organisational success because there was a significant
difference between the intended best HRM practices and the actual applied HRM
practices in the banking sector. Moreover, growing intra-group conflicts among
the employees in different commercial banks in Pakistan (post-privatization)
appear to be affecting organisational performance (Afzal, et.al, 2009).
The
Also, with new technology and increased global competition, the banking faced the
challenge of integrating technology into HR processes and systems which had by
then become a necessity for developing and implementing HR practices. The
inadequate attention on introducing technology oriented products, services or
processes can be attributed to the labour force which was not trained and
experienced enough to handle the transition (Anon, n.d.) towards increased market
pressures including competition, consumer satisfaction and innovation.
In the
3.7. Conclusion
In conclusion, a review of literature specific to Pakistan highlights some important
aspects related to this research. Firstly, the statistics presented emphasise that if
institutions are strengthened and corruption is controlled, there is a potential for
Pakistan to grow as an emerging economy. This is because it has a population of
180 million which provides a large consumer market for organisations and it has
the resources to attract foreign investment.
showed that till 2006-2007 the major economic indicators illustrated a positive
trend, there was a shift towards the service sector from the traditional agricultural
sector and structural deficiencies were improved through privatization, legislative
acts and investment in human resource development.
Further, extensive
continued to show improved performance with many schemes launched for the
return of educated Pakistanis abroad and other schemes providing the public at
large, with scholarships (after due process) for higher studies, across major
disciplines in foreign countries. In a similar attempt the sectors that were being
privatized and deregulated tried to attract educated Pakistani professionals working
abroad.
Just as was witnessed in China and other developing countries, including India, the
MNCs played an important role in defining the emerging corporate culture in
93
Related to the banking sector in particular, the discussion in this chapter highlights
three distinct stages in its evolution. In the pre-nationalization stage, the state
banking regulator (SBP) and the big five banks were established but in the
nationalization stage, they were placed under the public ownership, on the pretext
of operational inefficiencies, lack of security for depositors and inequitable
distribution of public wealth. However, after the initial one to two years, there was
evidence of an increase in mal-practices due to interventions by the elite politicians
and industrialists, overstaffing of the bank branches, poorly trained HR, ignored
customer services and the flow of credit to few specific segments of society.
In the post-privatization stage, there was an increase in the share of foreign and
private banks while the public sector banks witnessed a decreased market share
from 92.2 percent to approximated 45 percent. Additionally, the SBP introduced
reforms in the operational management and regulatory sphere due to which
competition increased, many mergers took place and technology was introduced in
the banks that resulted in the opening up of new markets and product segments.
Further, corporate governance frameworks were introduced, appointment of BoD
and management committees was made transparent, banking courts were
established and independent audit committees were introduced.
however, a gap evident in the intended and actual HR practices. There was also an
emergence of different employee categories in the domestic banks primarily, that
included young, professionally qualified employees and professional bankers who
returned from foreign banks and countries to work in Pakistan. However, this
resulted in intra-group conflict between incumbents and new hired employees in
the long established public sector banks where employees had been employed for
decades. The two challenges that confronted the HR departments at the on-set
included downsizing in the privatized banks that were overstaffed due to non-merit
hiring and the introduction of technology in most domestic banks in the sector
because of the out dated skill-set of employees. Similar lessons from privatization
and deregulation in the banking sectors of India and Bangladesh (in the same
region as Pakistan) also emerged from a review of the relevant literature.
Thus, it would appear from the above that there was a strategic need for policies of
privatization and deregulation in the banking sector of Pakistan but the resulting
structural and operational changes brought with them many operational and human
resource management challenges that continue to confront the banks. However,
the rapid growth of technology at the turn of the century, along with political and
economic instability in the country and an apparent incongruence between applied
and intended best HRM practices coupled with international and domestic
competitive market pressure present challenges for the banks.
95
The objective of this chapter is to discuss the methodology adopted to collect, analyze
and report data in this research. A predominantly qualitative approach was employed,
involving the design of a case-study methodology and the undertaking of 85 semistructured interviews with HR Managers, senior managers, line managers as well as
industry experts, in order to provide multiple perspectives and to cater for the variation
in views of different stakeholders. This chapter is divided into eight sections; the first
four sections discuss the rationale for the study, the research design, philosophical
orientation and the case-study methodology adopted for conducting the research. The
remaining four sections describe the use of the interview technique, the measures
adopted to assess qualitative research, the ethical considerations and the techniques
used for data analysis.
96
primarily in the U.S. and European settings (developed economies). However, in the
case of Pakistan, no study which comprehensively investigates the HR roles or the
orientation of the HR function, in the context of the internal and external factors that
influence the role HR adopts, has been conducted thus far.
literature makes the topic an interesting choice to study and the context of Pakistan a
contribution to existing research on HRM. To the best of our knowledge only a few
studies have been conducted in the general area of HRM in Pakistan (Khilji, 2012;
Khilji et al., 2010) and none specifically focuses on the strategic nature of the HR
Functions role orientation. Rather, previous research on HRM in Pakistan focuses on
the type of HR practices being employed (Khilji, 1999;2001) and the modes of
convergence and/or divergence for these HR practices in the global context (Khilji,
2002).
The rationale for selecting the banking industry to conduct the study lies in the
significant transformation it underwent between the mid 1990s and late 2000 which
resulted in significant changes in the HR function as well. Banking was considered to
be one of the most dynamic and growing sectors in Pakistan because of the combined
effect of a comparatively stable political environment and improved economic
conditions between 2000 and 2008. For the banking sector this meant a rapid growth,
entry of new banks due to the deregulation policy and an increased level of
competition with privatization of the big nationalized banks. Consequently, the banks
embarked on a reforms agenda in general which included massive restructuring in
organisation design and the implementation of the new policies. These policy changes
also impacted the HR department of the banks that introduced considerable changes
which included new HR policies and practices. We examine a sample of eight casestudy banks operating in Pakistan in order to draw a direct comparison and identify the
similarities and differences in the current state of the HR function and the extent of its
adoption of a strategic role orientation. The research aims to answer the following
questions:
1.
What is the current state of the HR function in the banking sector of Pakistan
and to what extent, if at all, is it performing what can be termed a strategic role?
97
Conversely, the inductive approach illustrates theory as the outcome rather than the
starting point of the research and involves the establishing of general propositions
based on observed facts while allowing for the findings to emerge from the recurrent
and dominant themes in the data. In our research the lack of much published data
limited the availability of any theoretical framework or empirical findings in the
context of the role of the HR Function in Pakistan and the factors that influence this
which justifies a greater reliance on the inductive approach. The adoption of this
approach aligns with the use of the inductive approach suggested by Bryman (2001) in
the cases where wealth of previous knowledge in the form of literature is inadequate.
However, an element of the deductive approach also exists in our research because the
key themes and variables used in developing the questionnaire were identified from
extant literature of the HR Function in the Anglo-Saxon context. Predetermined
categories were developed which represented various themes and sub themes prior to
98
the interviews; these were derived from questionnaires in extant literature which is an
example of the incorporation of the approach of deductiveness. A combination of
both the approaches conforms to the position adopted by Saunder et al. (2007, p. 489)
who state that while you may commence either an inductive or deductive approach, in
practice your research is likely to combine elements of both (p.489). Also Bryman
(2004) and Ghauri and Gronhaug (2005, p.16) suggest that both the deductive and
inductive approach may be considered mutually inclusive because no research can
purely be grounded in either of the choices.
generated through primary and secondary sources from the eight case-study banks.
qualitative research strategy usually emphasises words rather than quantification in the
collection and analysis of data (Bryman, 2004) because researchers are searching for
understanding and extrapolation to similar situations. Quantitative researchers on the
other hand seek cause and effect relationships, prediction, and generalization of
findings (Hoepfl, 1997). Since the objective of this research is to understand the
extent of the strategic role orientation of the HR Function and how the HR structure,
HR skill-set and the relationship of HR with line managers influences the orientation
of the Function, the qualitative approach appeared more appropriate. Further, Yin
(2003), also propose the adoption of the qualitative research strategy when the aim of
a study is to understand phenomenon rather than to investigate cause-effect
relationships. Also, the qualitative strategy was chosen because it allows for enhanced
understanding of the phenomenon under study by incorporating multiple stakeholder
views through in-depth interviews. In this research the views of the participants which
include the perceptions of HR, senior and line managers directed our understanding of
the current state of the HR Function and its role orientation (operational or strategic).
Further, Silverman (2000) posits that qualitative research methods are soft, flexible,
subjective, political and grounded. Aligned with this position, we contend that to
explore the how questions a flexible approach was required and in addition the
subjective and political nature of the qualitative approach benefitted our aim to
highlight the nuances, tensions and conflicts between the banks examined and the
different stakeholders interviewed.
99
Further, qualitative research studies are usually rich with details, offer intriguing
insights through the participants experiences of the world and hence result in thick
and rich descriptions (Stake, 1995; Bryman and Bell, 2003; Eisenhardt, 1989). These
benefits of the qualitative approach underline our selection for the following reasons:
(i) since the phenomenon under study is of contemporary nature and on which not
much theoretical or published data is not available, the past experiences of the
participants narrow the historical gap related to the developments in the three main
thematic areas explored (HR role, structure and skill-set and devolution and HR-line
relationship); (ii) the qualitative approach allows for obtaining the finer details which
aid in providing the context for the study; this approach enables the ability of
replicating the data in different contexts and situations and facilitates the use of the
case-study method that allows for obtaining contextualized data.
The qualitative design was operationalized in our study by collection of data through
the semi-structured interview technique. This technique allows for obtaining large
amounts of data which is beneficial in developing thick descriptions and is essential
for exploring contemporary issues in under researched contexts. In this case the
contemporary issue was the extent of the strategic orientation of the HR Function and
the context was a developing, Asian country (Pakistan) where very few studies on
HRM have been conducted previously. The qualitative approach complements our
aim to develop a deeper understanding of the complex phenomenon which involves
the study of the current state of the HR Function in the banking sector of Pakistan, the
extent of its strategic orientation and the role of the HR structure, skill-set and
devolution of HR responsibilities to line management (which defines the HR-line
relationship). Further, the definition of the strategic role of the HR Function is beset
by contested and contrasted perceptions which requires an improved understanding.
interpretivism and constructionism (Bryman 2001, p.20) which is the position adopted
in this research.
paradigm is important because it affects the choice of methodology adopted (EasterbySmith et al., 1991; 2002) and forms the underlying basis for supporting the arguments
which validates the research strategy Schell (1992). According to Schell (Ibid., 1992))
the dividing line between the methodological and epistemological arguments is
indistinct yet not perfectly correlated (p. 8).
101
Related to the ontological position adopted by a study Hartley (2004) state that it
influences the framing of the research questions and hence the methodology applied
for data collection. The qualitative research lies in the ontological foundation that
reality is a type of projection of imagination, the point of view of the researcher or at
least one of the subjects being investigated which can be examined through insights
and subjective processes (Schell, 1992).
concerned with the nature of social entities, whether they have a reality external to that
of social actors or whether they should be considered as social constructions built up
from the perceptions and actions of the social actors. Ontology seeks to answer the
following types of questions: What is being? What is the nature of reality? Is there a
reality? Objectivism is an ontological position that asserts that social phenomena and
their meanings are beyond our reach or influence while constructionism is an alternate
ontological position that states that social phenomena and their meanings are
continually being created and revised by social actors. Constructionists believe that
they construct meaning based on the interaction of the subjects of the research with
their surroundings. This research is closely aligned with the constructionist
philosophical view because apart from the formal organisational structures, policies,
process and practices, we explore the views of HR, line and senior managers on how
they perceive the HR Function to have changed in its role orientation (if at all) and
how in their view, the relationship between the HR structure, skill-set and devolution
appears to shape the reality we seek to understand.
or how much line of inquiry. Moreover, the exploratory what category which
investigates the questions of how and why is stated to best suit the case study
method approach. This is because the why and how questions are concerned with the
operational links that need to be traced over time rather than mere frequencies or
incidence (Ibid., 2003). The case-study method is unlike the survey method which is
generally considered preferable to answer questions of what, where and how many
targeted at collecting the frequency of the happening of events (Yin, 1994).
The characteristics of the research questions of our study fit the case study design
approach (above) as proposed by Yin (2003).
what the current state of the HR Function is in the banks examined and the extent of
the strategic role orientation achieved by the HR Function. As described in the
preceding paragraph, in our research, the what question aims at understanding the
deeper issues of how and why the HR Function achieved the extent of strategic role
orientation (if at all) rather than providing causal explanations with the aid of
numerical figures of the number or types of events that led to the current state of the
HR Function.
devolution, the HR structure and the HR skill-set may have influenced the extent of
strategic role orientation achieved by the HR function.
Our study employed a case based qualitative research methodology which was chosen
above the other strategies primarily to develop a deeper insight and rich understanding
of the research phenomenon and to enable the researcher to explore the underlying
patterns and trends which would not have been apparent otherwise. Also, Yin (2003,
p.13) supports the adoption of the case-study approach when the investigation is an
empirical inquiry that investigates a contemporary phenomenon within its real-life
context, especially when the boundaries between phenomenon and the context are not
clearly evident. The contemporary phenomenon in our research is the strategic role
orientation of the HR Function in the banking sector in Pakistan which is a developing
nation. A reflexive approach was employed in our research which according to
Burawoy (1998) enables the extraction of a general view from the unique and moves
from the micro to the macro and thus connects the past to the present in anticipation of
the future. Through the views of multiple stakeholders at the micro level emerged a
picture of the extent of the role orientation of the HR Function (strategic, operational)
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in the case-study banks which described the state of the role orientation of the HR
Function in the banking sector of Pakistan at the macro level.
Further, the flexible and iterative nature of the case-study method allows for a deeper
insight into the organisational issues where the context has an important role to play.
According to Morris and Wood (1991) the case-study method also helps in developing
a richer understanding of the data and context of the research and the processes being
enacted; hence a more comprehensive picture emerges with multiple perspectives,
intricate details and underlying meanings. Additionally, Eisenhardt (1989) advocate
the case-study method to be appropriate for research when little is known about a
phenomenon and a limited number of studies exist on the topic. Therefore, we
deemed the case-study approach to be an appropriate choice in view of the limited
research on the human resource function in the context of Pakistan especially from the
perspective of the contemporary HR structures, devolution of HR responsibilities to
line managers and the skill-set of the HR Function.
Further, Yin (1984) describes cases with a single source of information as holistic
cases and cases with multiple sources of information as embedded cases. We used
104
multiple sources to collect data in order to analyze the phenomenon in detail to report
the contrasting opinions and contested views of the stakeholders. The interviews
conducted addressed multiple levels within the organisation (senior managers and line
managers who were mostly middle managers) as well as multiple stakeholders (HR,
line and senior management). Contrary to the holistic cases which have the potential to
erode the multiplicity and complexity of the perspectives, the embedded approach
followed here highlights these perspectives for greater insights.
We selected eight case-study banks for the purpose of this largely exploratory research
which aims to study the extent of the strategic role orientation of the HR Function and
the influences of devolution, HR structure and HR skill-set on the role orientation.
While there is no ideal number of cases to be examined in a study, based on
Eisenhardt (1989) who recommended between four and ten organisations, we selected
eight case-study banks to balance for the robustness of the research and the resource
constraints. Purposeful sampling was employed in the selection of the case-study
banks considered more suitable by Yin (1994). This catered for the diverse features,
history, size and ownership of the banks in order to enhance the generalizability of this
study across the banking sector to whatever extent possible. On the one hand the
varying sizes of the banks provided greater generalizability to the findings and on the
other hand they allowed for the identification of nuances which emerged as a
consequence. In this study, our aim was to explore a maximum number of banks from
different categories to ensure wider coverage of all sorts of banks which comprised the
sector hence we did not control for the size of the banks; rather size was one of the
factors which influenced the varying outcomes related to changes in the orientation of
the HR Function in the case-study banks (refer to section 8.2.).
Pakistans banking sector consisted of a total of 47 banks (at the time of interviews)
and is broadly divided into two categories according to the State Bank of Pakistan (the
regulator), foreign owned and domestic owned banks. Four of the case-study banks
chosen were foreign owned while the remaining four were domestic owned; this
balance was maintained in order to control for the representativeness of the sample
and hence to mitigate any influences that any one category of banks may have had on
the other in terms of the developments and extent of changes across the case-study
banks. In the first phase of purposeful sampling four domestic and two foreign owned
105
representative of all categories of banks, both private and privatized banks (two each)
were included in the sample of domestic banks. The two privatized banks which were
the large sized domestic banks were formerly nationalized and transferred to the
private sector in the last decade as a consequence of the banking reforms and
privatization policies of the government. The other two domestic banks which were
medium sized were established in the private sector and still continue to operate as
such. The two privatized domestic banks are among the largest five banks in Pakistan
with 1461 and 1089 branches respectively. Studying these two banks provides a
unique perspective as there existed a blend of both old and new HR practices in these
banks which highlighted differences in their approach and strategy in comparison with
the banks established in the private sector from the outset. This sampling strategy is
aligned with the position adopted by Whipp (1988) who states that the case-study
method allows for an exploration of and reveals the different adjustments made by
employers.
Initially only two foreign owned banks out of a total population of seven in the
banking industry in Pakistan were selected but subsequently it was considered
appropriate to add another two in the study. The main reason for expanding the
sample size of the foreign banks from two to four was to provide an equal
representation of foreign banks in the findings and also because their smaller size
made it difficult to find an adequate number of interviewees in each category of
stakeholders to be interviewed. In the entire banking sector only one foreign owned
bank is categorized as medium sized (165 branches countrywide) while the other
foreign banks are rather small in size with 11 to 14 branches each. The increase in the
sample size of the foreign banks helped in providing deeper insights into this
particular segment of banks and a more meaningful comparison with the domestic
banks. Table 4.1 illustrates the key features of the selected banks; all the domestic
banks have a larger number of branches in comparison with the foreign banks and the
banks with a larger branch network also have a larger number of employees. Hence
106
our categorization of the banks is not specifically based on the number of branches but
also the number of employees which commensurately increase with the branch
numbers. For example VINTAGE BANK with 1461 branches has 12600 employees,
MODERN BANK with 321 branches has 4000 employees and WESTERN BANK
with 14 branches has 490 employees.
Table 4.1: General comparison of the case-study banks
BANKS
Ownership
Size
Branches
Employees
VINTAGE
CLASSIC
TRADITIONAL
MODERN
GLOBAL
WESTERN
ANGLO
TRANSCO
BANK
BANK
BANK
BANK
BANK
BANK
BANK
BANK
Domestic
Domestic
Domestic Private
Domestic
Foreign
Foreign
Foreign
Foreign
Privatized
Privatized
Private
Owned
Owned
Owned
Owned
Large
Large
Medium
Medium
Medium
Small
Small
Small
1461
1089
200
321
164
14
11
18
12600
9300
6000
7250
4000
490
1010
1500
Gaining access to these banks was a huge challenge especially in the beginning despite
the fact that one reason for choosing these organisations was their better reputation in
terms of sharing information. Initial effort to gain access into these banks met with
very little success when official communication channels were used. However, a
totally different response was experienced when the top management in all the casestudy banks was approached for this purpose. Once this was managed, access to the
relevant people improved significantly but with a varying degree of success in the
different case-study banks. On a comparative note, the domestic banks were found
more forthcoming and open in sharing their policies especially in terms of their
manuals, policy documents and reports etc., in comparison with the foreign banks.
latter feel more comfortable with, if they find it relevant with their work (Saunder et
al., 2003).
interviewee significantly impacts the interview process (Sekaran, 1984) and the
quality of the data collected; it is thus important to gain the confidence of the
interviewee to establish trust which is of paramount importance for the interviewee.
The feeling of trust allows the interviewee to open up for sharing meaningful
information with the interviewer which enhances the richness of the data. Despite the
challenges linked with interviews such as their time consuming nature, the potential
for researcher bias and indirect filtering / interpretation of the interviewees comments
/ statements (Creswell, 1994) it is still considered a useful mode of data collection.
This is because interviews provide greater flexibility during questioning (Bell, 2005)
since they allow for follow-up questions to probe for additional information where
deemed necessary (Nachmias and Nachmias, 1996) and interviews can provide
historical information as well. Also, the interest in the interviewees views as opposed
to the researchers concerns (Bryman, 2004) make the interview technique more
appropriate for this study.
method of collecting data for quantitative research was not suitable for the research
design adopted for this study because of its limitation to examine and detect patterns
of association only (Bryman, 2004). This would have conflicted with our aim to
develop a deeper and better understanding of the phenomenon being investigated.
Further, the semi-structured interview technique adopted was necessary because there
was no a priori, specified set of research questions (hypotheses) that were to be
investigated.
The banks selected were in three major cities of Pakistan namely Karachi, Lahore and
Rawalpindi. The head offices of six out of the eight case-study banks were in Karachi
which is the major financial hub. A few preliminary or pilot interviews with junior HR
managers were conducted in Rawalpindi in January 2009. Prior to the interviews the
bank management and participants were provided details of the study through an
information sheet (Appendix A) and were assured of their anonymity.
The
participants were assured that their data would be used only for academic purposes
and would not be shared with any of their competitors and they were made to sign a
consent form (Appendix B). For these interviews an initial guide was used which was
prepared after an in-depth study of the relevant literature (Appendix C-1, C-2).
Some questions were also adopted from the questionnaire published in the CIPD
Research Report (The changing HR function, 2007); for example the list of drivers of
change mentioned (question 22), the HR practices identified (question 30) and the
skill-set / competencies of HR managers (question 29). While the list generally
includes individual level skills, a study of these skills can provide an understanding of
the functional level skills, as a combination of individual level skills results in
functional level skills. For example, strategic thinking, influencing / political skills
and business knowledge reflect an emphasis on the business partner type of skill-set
needed at senior HR level (CIPD, 2007; p.56). The choice of adopting some questions
from the prescriptive literature stems from the motive to discuss the drivers,
challenges and issues HR practitioners and line and senior managers have actually
faced. The reflexivity process which was initiated after the pilot interviews helped in
refining the interview guide (King, 2004) and based on this experience a framework
for the subsequent interviews was prepared.
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covered in the guide, sequence of the questions and the focus of the questions were
addressed in the refinement process. In the final interviews greater emphasis was
placed on questions which were producing more informative answers and were
highlighting important aspects that coincided with our main themes.
Keeping in view that the primary focus of our research is on the current state of the
HR function and the presence of a strategic role (if it existed), different themes were
identified for the interview guide which has a direct bearing on the HR functions role.
These included devolution which influences the HR-line relationship, the HR structure
and the HR skill-set. A separate set of questions was prepared for senior / line
managers in order to elicit their perceptions and views regarding the HR functions
current role orientation. In the case of HR managers, the questions to the senior HR
Managers were more focused on the strategic issues while those to the junior HR
managers were more focused on the operational issues and their respective specialist
areas.
Based on the above themes, interviews were conducted with HR and line managers;
32 of the total 83 respondents were females (38 percent). The average age of the
senior managers interviewed was 40 to 55 years with an experience of between 15 and
25 years. In addition, the line managers interviewed had an average of between three
and seven years of experience and they were between 28 and 35 years of age (see table
4.2) for details.
Age
Experience
Senior managers
11 male; 6 female
40-55
15-25 years
Line managers
17 male; 10 female
28-35
3-7 years
Junior HR managers
10 male; 9 female
24-35
3-7 years
Senior HR managers
13 male; 7 female
35-55
8-25 years
Note: Both industry experts interviewed were male with work experience between 25 and 30 years.
Broadly speaking, we use the term line managers to include those managers who had
either one or two levels of staff below them, in the organisational hierarchy. In extant
research (Currie and Proctor, 2005; Smith, 1997; Staehle and Schirmer, 1992), the
110
term middle manager is used for managers who are positioned in the hierarchy, with at
least two levels of staff below them. The same categorization was later adopted by
Conway and Monks (2010) in their research on the Irish health service. As our sample
also included managers with one level of staff below them, we have grouped them
together as line managers for purposes of consistency in terminology. Managers with
one level of staff below were included in the category of small sized banks
(WESTERN BANK, ANGLO BANK and TRANSCO BANK) due to the small
workforce size and hence the non-availability of the requisite number of middle
managers in these banks. The span of control of line managers for both the categories
used was between three and five employees. The similar span of control of managers,
despite the difference in the levels of hierarchy below them is due to the less
hierarchical levels in the smaller banks which resulted in a span of control of three to
five employees. Further, we did not include first line managers who are defined by
Hales (2005, p.473) as those to whom non-managerial employees report, because our
study is focusing on the strategic role of HR on which necessary depth of information
at that level may not have been available.
In the case of HR managers, the senior HR manager is defined as the HR Head or the
Head of a unit / section in the HR function while the junior HR managers are those
who generally have work experience of 3 to 8 years. Invariably the first interview in
all the case-study banks was with the HR Head and a special focus was kept on the HR
Functions strategic perspective such as the extent of strategic orientation the HR
Function had gained and whether the HR Function had been able to increase its
significance and influence in the case-study banks. Interviews with the junior HR
managers were focused more on the operational and administrative role of the HR
Function. These employees were questioned about the changes in their specialist areas
which included structural developments, the extent of devolution of HR practices to
line management and the identification of key HR skills required to perform in the
new role. The line of questioning adopted for line managers concentrated on their
perspective of the HR Functions role orientation, especially the HR-line relationship
and devolution of HR responsibilities to line managers. The basic essence of the
exercise was to provide a holistic organisational view and to carry out the research
from multiple perspectives to provide thicker description and rich data.
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Following the pilot interviews, the first phase of interviews was conducted over a
period of three months in three case-study banks two of which were based in Karachi
and one in Rawalpindi. A total of 29 interviews were taken during this period. In the
second phase (September-October 2009) three more case-study banks were covered
and a total of 32 interviews were conducted. The third and final phase of data
collection (22 interviews) was performed between December 2009 and January 2010
in which the last two case-study banks were covered. In total 85 interviews (see table
4.3) were carried out which included two former bankers who had been working for
more than 25 years but were no longer employed in any of the sample case-study
banks. One of the former bankers now heads a renowned HR consultancy firm in
Pakistan. Details of the interviews in each bank are presented in table 4.3.
VINTAGE
CLASSIC
TRADITIONAL
MODERN
GLOBAL
WESTERN
ANGLO
TRANSCO
BANK
BANK
BANK
BANK
BANK
BANK
BANK
BANK
Managers
Senior
managers
Senior
13
10
11
10
11
10
HR
Junior
Line
managers
Total
85*
*The total includes two veteran bankers who are no longer employed in any bank.
For the most part the purposive sampling approach was adopted because the types of
individuals selected had the potential to provide the information which the researcher
was interested in and which may otherwise have been difficult to obtain as suggested
by Maxwell (1997). This is highlighted in the discussion above on the varied foci of
the interviews with the different stakeholders. Apart from the Head of HR, other HR
managers were interviewed in the HR department. Some of these managers were
experienced while others were fairly young and in the early stages of their career.
This technique was adopted in an effort to broaden the sample to facilitate the
112
gathering of more holistic and richer data. In general employees who had working
experience of at least three years in the HR department were included in the sample.
In the banks where a separate HR strategy unit/division existed, the individual heading
this division was interviewed. In almost all cases the HR Head was instrumental in
arranging interviews with other members of the HR team and performed the role of a
gatekeeper (Hartley, 2004).
The convenience sampling approach was adopted for conducting interviews of both
senior and line managers. The underlying reason for including line managers in the
sample of interviewees was to provide a broader organisational perspective to the role
orientation of the HR Function and the extent of its change (if it had occurred) as they
are also the stakeholders and internal clients of HR. The convenience sampling
approach was required as there were no other means to approach these individuals
personally and the HR department facilitated these interviews with some individuals
based on the positions identified by the researcher from the organisation chart. An
effort was made to interview those line managers who had more interaction with the
HR department / division because it could provide more relevant information on the
shifts that had / had not taken place in the role orientation of the HR Function based on
their greater interaction (working relationship) and experience with the HR
department. This enabled us in identifying the finer intricacies in the HR-line
relationship and also provided an insight into the experiences of line managers with
the HR department. In a few cases the snow-ball technique was also used as a senior
managers interviewed identified another colleague and arranged an interview with
them. This was of much help as getting an appointment from senior managers like the
Head of Operations or Head of Consumer Banking was difficult considering their busy
schedule. The alternate source (snowball technique) also proved very useful as it
provided access to some line managers independent of the HR manager channel. It
fulfilled the aim of the researcher to get independent views of line managers (which
might not have been possible if all of them had been approached through HR
managers) and added an interesting dimension to our data as quite often line
managers views were quite divergent from those of the HR managers (as will be
highlighted in our analysis chapters later).
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In most cases respondents were fairly knowledgeable in the area and were able to
understand questions in the correct perspective and provide relevant information.
However, in some cases respondents required clarification and elaboration of the
questions before they could present a proper response. Especially, issues regarding
the strategic role of the HR function which inherently is of contested nature and on
which the researcher had to seek clarification and understanding of the interviewee.
Additionally, the interviewer defined key terms such as business partner, specialist
teams and specialist services to the respondents in order to ensure that all the
respondents had the same concept in mind when responding to the questions. The
term specialist services is aligned with the term centre of expertise used by Ulrich et
al., (2008); it was renamed to customise it with the Pakistani context as from the pilot
interview it emerged that HR professionals in Pakistan generally refer to the centre of
expertise as specialist services. Business partners were defined as individuals who
work with the line managers for their goal achievement, through effective strategy
formulation and execution to develop a better understanding between the HR and the
business units (Ulrich and Brockbank, 2005). After studying the data there were
instances where information seemed inadequate for which second interviews were
conducted with the same people. Additionally some respondents were re-visited to
clarify certain anomalies which had emerged after comparison of the interview data
and documents provided by the banks.
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memos, presentation and others extremely hesitant. This could be due to inhibition
and fear that management may not appreciate dissemination to external parties. The
domestic banks were quite willing to provide documents but foreign banks generally
went through a much lengthier process before providing documents as in some cases
they required clearance from their regional offices to provide the data. However, after
consistent efforts the documents were made available and the case-study banks
provided adequate information.
Information on the profile of the banking sector and general information pertaining to
it like the banking reforms / changes, government policies affecting it and the factors
influencing the sector were gathered from the State Bank of Pakistan (regulator of the
banks) and the National Institute of Banking and Finance (professional body). In
addition a survey conducted by Sidat Hyder (a renowned consultancy firm in Pakistan)
was also accessed. The survey was conducted on the human resource management
practices in Pakistan and includes some organisations from the banking sector as well.
The survey highlights some interesting facts and figures and provides a comparison
with the HR practices implemented in the other sectors like pharmaceutical, textile etc.
The external validity is the degree to which the findings can be generalized across
different settings which Yin (2003, p.10) states is limited to theoretical propositions
and not populations in qualitative research. Hartley (2004) define external validity as
knowledge (processes and context) associated with an organisation that identifies the
conditions under which the same behaviour can be expected to be repeated. In the
context of qualitative research generally there is a tendency to use the case study
method and small sample size due to which generalizability is low (Stark and
Torrance, 2005). However, keeping in view this draw back in the research design we
selected a sample size of eight banks which is likely to improve the robustness of the
conclusions drawn. The variety in the sample of banks selected and the multiple
participant interview design also enhanced the generalizability of these findings to
some extent because the case-study banks include all major types of banks operating
in the sector and the interviewees cover a majority of the diverse stakeholders.
Further, qualitative researchers are inclined to produce a rich account of the details of
the context which Geertz (1973) refers to as thick description; Guba and Lincoln
elaborate that thick description is a database for making judgments about the possible
transferability of findings from one context to another. In our research a broad sample
size and an in-depth study with a special focus on the finer details of the context in
which the banks operate provides a comparatively higher degree of generalizability
and transferability of the findings of this research.
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In each case
permission was taken for the use of a tape recorder and respondents were assured that
all data acquired would only be used for academic purposes and identities would not
be revealed to anyone even within the organisation a mechanism suggested by
Churchill (1999). In a few cases individuals showed reluctance and their interviews
were not recorded; instead details were noted on paper. Anonymity both at the
organisational and individual level was promised to the participating banks and the
employees respectively. All case-study banks had requested for anonymity before
providing access to their data as our data analysis draws on the comparison between
banks and they did not want a direct comparison to be drawn in a manner which could
reveal their identity. At the individual level it was important to ensure anonymity as
employee views were also sought on issues of sensitive nature such as the HR-line
relationship. Again, on the condition of complete anonymity we were able to allay the
apprehension the case-study banks had early in the fieldwork stage because of which
they were hesitant to share their documents as they considered information on their
HR plan and new initiatives sensitive in nature. Every effort was made that the entire
research process remained transparent with no negative effect on any individual or
organisation.
A limitation of the research was the non-availability and limited access to documents
in some cases which hindered triangulation of data in the research especially in the
case of foreign banks. Also, the lack of proper understanding of the HR concepts
among a few respondents led to ambiguous responses initially. Last minute
cancellations, rescheduling and inordinate delays in responses resulted in frustration
and slowed down the research process. The wide geographical spread of the casestudy banks also contributed to logistical constraints.
were subjected to a preliminary analysis at each of the stages. Based on the emerging
themes from data we kept refining our questions and similarly based on experiences
after conducting the interviews we opted for adjustments in strategies such as
identifying a key participant from each sample category and maintaining contact with
them to ensure that interviews were not delayed. This process of reflexivity and
constant iterative approach aided in retaining the focus of the data collected to some
extent which was necessary for identifying common themes that are required for a
cross case comparison.
Data analysis consists of examining, categorizing and tabulating of data (Yin, 1994).
For qualitative analysis comparatively fewer tools and techniques have been
developed (Miles and Huberman, 1994) and the intensive use of empirical evidence is
stated to result in overly complex theories while the technique of building theories
from cases can result in a narrow and idiosyncratic theory (Eisenhardt 1989, p535). In
order to enhance the transferability of this study we followed a stringent data
collection and analysis process, the latter includes transcribing, coding and compiling
data for a thematic analysis. Further, since the aim of this study was to understand
through the experiences of the participants, our stance is to generalize the findings
restricted to certain theoretical propositions with the aim to extend debates in existing
literature rather than to generate new theories.
each bank and across all the case-study banks as well, and to observe emerging
patterns and to draw meaningful conclusions.
The above explanation followed for the data analysis illustrates that some elements of
the grounded theory approach were employed in the process. Grounded theory is
concerned with the development of theory out of data and the approach is iterative or
recursive meaning that data collection and analysis proceed in tandem, repeatedly
referring back to each other (Bryman, 2004). It has become the most widely used
framework for analyzing qualitative data where the researcher does not develop
hypotheses about the phenomena; rather they make sense out of observations. To
gather this information, techniques such as unstructured or semi structured interviews,
participant observation and documents are used.
intervention in all policy areas and while HRM policies were reviewed, the lack of a
conducive culture and resources resulted in non-implementation to a large extent.
Further, the bank underwent two-three downsizing phases, with little new induction, to
120
reduce the overstaffing that occurred in previous years. However, there is still a
significant presence of incumbents in its workforce and this legacy presents challenges
for any changes proposed.
CLASSIC BANK
CLASSIC BANK, also a large sized, privatized, domestic commercial bank was
founded soon after Pakistans independence in 1947. It was one of the first banks in
Pakistan to be privatized (to a domestic conglomerate group) as part of the
governments plan to revitalize the financial sector of Pakistan (Khalid, 2006). It has
a local branch network of over around 1100 branches, 690 ATM outlets and a total
workforce of almost 9300 employees. It has an approximate customer base of 5
million and the total asset base is close to USD 8 billion, with a deposit base nearing
USD 5 billion (Reuters, 2013). Its five year average sales growth rate of 16.6% is
much higher than industry growth rate of 13.5%. It is a typical domestic Pakistani
bank which exhibits the local culture in its corporate environment but to make it viable
for privatization, it adopted some best practices and reconfigured the HR department
(see Appendix E) to embody a modern look. The best practices were adopted from
foreign banks and the new inducted employees; they were performance based and thus
tailored to retain performers. Similar to VINTAGE BANK, this bank also underwent
downsizing pre and post privatization and still has a significant presence of incumbent
employees in its ranks. Further, the HR department tries to maintain a good working
environment through effective leadership (Anwar, 2013), encouragement of
communication and the use of conflict management. However, the implementation of
such philosophies isnt completely realized and the work environment (including
organisational structure and human relations), at MCB, is still not considered
completely favourable (Bhutto et al., 2012).
TRADITIONAL BANK
This is a domestic, private, middle sized, commercial bank which was established in
the mid 1990s and operates with approximately 200 branches, 260 ATMs and 6000
employees. The bank has an asset base of USD 3 .5 billion and its deposit base is
approximately USD 3 billion. One of its major clients is a government institution
which provides it a major source of earnings. The bank has a bureaucratic culture, an
outlook resembling that of a public sector organisation with some representation of
121
incumbent employees who had joined from other public banks when TRADITIONAL
BANK started its operations and needed experienced employees. The general work
environment and culture of the bank is typical of that, in most Pakistani organisations
where decision making is centralised. The HR function at the bank is relatively small
in size (see Appendix F) and had recently revamped its practices (at the time of
interviews).
MODERN BANK
MODERN BANK is a domestic, private, middle sized commercial bank, with a
workforce nearing 7300 and a branch size of roughly 321. The bank was established
in the early 2000 period under a new management and owner. Previously the bank
operated as an international bank but had to close its operations due to regulatory and
legal concerns.
approximately USD 5 billion (MODERN BANK, 2012). The deposit base has also
grown significantly over the last year from PKR 400 billion to PKR 457 billion. The
bottom line has also shown healthy growth of 30% yield / year, growing from PKR
2.6 to PKR 3.38. Additionally, the bank has one of the strongest consumer banking
operations (at least among the domestic banks) in the country that focus on providing
high quality services at low prices. As in the case of other domestic banks, MODERN
BANK recognises the importance of employees in an organisation but it does not
appear to have a strong HR system, in the typical sense 9. There is a strong role of the
owners in the monitoring and formulation of policies regarding HRM and
management promotes a family-like culture (Bushra et al., 2011) to minimize turnover
and increase communication and motivation. The HR function does not have a tall
hierarchy and there is a clear segregation between HRM and the Training and
Development (T&D) department (see Appendix G). The HR function is segmented
between the north and south region with some activities that are directly implemented
and to a certain extent decided within the specific region; the HR Head is located in
the north region.
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GLOBAL BANK
This foreign bank is a medium sized bank with 164 branches and approximately 4000
employees. It has the widest branch network in the category of foreign banks; the
branches are spread across 29 different cities. Like the other commercial banks
examined in this study, the bank offers Consumer, Wholesale and Islamic Banking
services and had one of the best long term credit rating amongst all the private
commercial banks in the country (in 2012).
capitalization of PKR 63,000 million and offers a dividend yield of 12.1%. The banks
EPS and ROI are both below industry average at PKR 1.54 and PKR 10.9 respectively
but it has shown an impressive growth over the last few years. One of the reasons
GLOBAL BANK maintained a good position in the market was due to the ability to
attract the best talent (Naeem, et al., 2008). This is also because of the strategic
outlook10 the bank has adopted for its HRM systems. The country Head HRM reports
to the CEO of the bank in Pakistan and to the regional head (MENA region 11) as well.
This indicates that the group12 tries to maintain some control over the HRM polices
being practiced in the region. The Pakistan subsidiary claims that the group policies
are generally implemented in the region as is, but minor modifications are made to suit
the local laws/culture. Moreover, the bank promotes employee engagement policies
and tries to maintain a supportive role of the HRM department with joint involvement
of the line managers. The HR function is designed with a specialist group, a centre for
service delivery and generalists in the role of business partners (see Appendix H).
WESTERN BANK
This foreign, small sized bank started its operations around 2005; it has 14 branches,
generally in the main cities of Pakistan, with less than 500 employees. By the time
WESTERN BANK entered the market, the boom in the banking industry had started
to decline, the political turmoil in the country was at its peak and the State Bank of
Pakistan had instituted stringent policies. These were the primary reason why the
bank was unable to grow at a fast pace, unlike GLOBAL BANK which had been an
industry player since the late 1990s. The bank has an asset base of around USD 68
billion which has shown little growth over the last few years. Further, it caters to a
10
123
niche market and downsized its consumer banking segment back in 2010 13 ;
consequently, the HR function was also oriented towards the overall goals of the
company. The HR function (see Appendix I) is primarily centralised and while the
HRM policies are generally designed at the group level14, localisation based on the
market needs also exists. The HRM policies of the bank are reviewed annually (unless
required at an earlier date) to ensure alignment with the strategic outlook of the
banking operations in Pakistan. The culture of the bank is evolved along the lines of
its parent company and the employees are provided multiple channels for
communication and involvement in organisational matters; hence, there is a focus in
the bank on employee engagement activities.
ANGLO BANK
This small sized foreign bank started its operations in Pakistan more than 20 years
ago; it currently has 11 branches and approximately 1000 employees. In 2011, the
bank earned a profit before tax of PKR 2.5 billion, and had about PKR 70 billion in
deposits and total assets of PKR 96.4 billion. Presently, the bank is focusing on
corporate banking operation rather than consumer banking and is thus operating in a
niche market. The HRM function employs few employees but it is involved at the
strategic level; the shortage of staff is off-set through the use of technological
advancements like ERP15. The structure of the HR function is placed at (Appendix J).
The positions identified below the level of the Country Head HR are not separate
departments rather these positions are occupied by a maximum of 1-3 employees, thus
giving a very lean reporting structure. Moreover, the HR is centralized and approvals
for all decisions are sought from the head office in Karachi 16. Bank sources claim that
the parent company maintains some control over the HRM policies that are
implemented in Pakistan due to the limited number of branches and employees and
especially due to the recent restructuring in Pakistan.
TRANSCO BANK
TRANSCO BANK, the third, foreign, small sized bank in our sample has 18 branches
with approximately 1500 employees. Like ANGLO BANK, this bank also entered the
13
http://archives.dawn.com/archives/172723
Parent country
15
Enterprise Resource Planning
16
HRM departments location
14
124
Pakistan market when the economic and political conditions in the country had taken a
turn for the worse.
operations, led to the banks acquisition by a local bank early this year (2013) but the
deal has yet to be completed.
department has not been restructured and retains its functionality as such. The HR
Head in Pakistan reports directly to the regional head 17 of TRANSCO BANK (see
Appendix K) and the HRM operations are regularly monitored by the regional
manager who is involved in formulating a majority of the standard operating
procedures (SOPs) at the subsidiary in Pakistan. The operations of the department
are quite centralized and approvals are sought from the Head Office. The small HR
workforce at the bank is responsible for all the core and support activities of the HR
function and is actively engaged with the employees. This conforms to the culture of
the bank which is quite open and has evolved on the pattern of the parent company.
Conclusion
To summarise, this study employs a predominantly qualitative research methodology
and the case-study method for reporting and analyzing data obtained from the eight
case-study banks. The qualitative, in-depth interview technique is chosen to interview
83 HR, senior and line managers and two industry experts to collect contextualized
data from multiple stakeholders in an attempt to generate thick descriptions and
highlight idiosyncratic details pertaining to each of the case-study banks to analyze
how these may have influenced the role orientation of the HR Function. This data is
also triangulated with company documents where required, to clarify ambiguities
emerging from the interviews and to provide more robust findings. The objective of
employing this research design is to provide a better understanding of the dimensions
explored as opposed to arriving at generalized law like conclusions.
17
125
function in the past used varied sets of indicators as evidence to explore the presence
or lack thereof, of a strategic role. For example, Truss (2009), Kelly and Gennard
(2007), Hall and Torrington (1998), Sparrow and Marchington (1998) and Kessler et
al., (2000) place an emphasis on studying the indicators and attributes of the HR head
and the representation of the HR function at various forums, to investigate the role
orientation of the HR function. Truss (2008) employs indicators like involvement of
the HR function in the strategic decision making of the organisation, the vertical and
horizontal integration of the HR strategies and the focus on transformational activities
and long term planning to assess the strategic orientation of the HR function. Golden
and Ramanujam (1985), Azmi (2011) and Teo (2000) make extensive use of the
participation of the HR function in the strategy formulation process as an indicator of
126
the evidence of the presence of a strategic role. Hence, to make our findings more
holistic and robust, we attempt to integrate and investigate various indicators of
evidence of a strategic role of the HR function; these broadly encompass the key
aspects which can influence the role adopted by the HR function.
This chapter is organised into five sections. The first section explores the indicator of
hierarchical position and attributes of the HR head to study the influence (if any) on
the role orientation of the HR function. With a similar objective, section two explores
the indicator of the initiatives undertaken by the HR function and the nature of
activities performed by the HR function.
5.1. Hierarchical position and attributes of the HR Head in the case-study banks
In this section, we explore the hierarchical position of the HR Head, his representation
on the board of directors and other management committees, the profile of the HR
head and the embedded institutional mechanisms to evaluate whether and if they
influence the role of the HR function. The indicator of hierarchical position of the HR
Head (reporting relationship) was chosen because of the significance extant literature
associates with the direct reporting relationship of the HR Head with the Chief
Executive / President and the representation on the Board of Directors and
management committees.
Torrington (1998), Kelly and Gennard (1996; 2007) and Kessler et al. (2000) describe
board membership as desirable because board level HR directors have more influence
over strategy and are more positive about the perceived performance of the HR
127
function. Further, the rationale for studying the indicator of profile of the HR Head
through the dimensions of the career background of the HR Head, the informal
network of the HR Head, tenure of the HR Head inside / outside the organisation and
the age and experience of the HR Head (see table 5.1) is underpinned in extant
literature.
It also lies in the need to identify which individual level factors can
influence the status / role of the HR function in addition to the more formalized,
institutional mechanisms or factors. For example, Hall and Torrington (1998)
highlight that beyond the formal lines of reporting and board room representation, the
attributes of the HR Head influence the role the HR function plays within an
organisation. Similarly the dimension of strength of the informal network that the HR
head forms with important executives leads to wider acceptance of HRs input in the
strategic decision making process according to research by Kelly and Gennard (2007)
and Sparrow and Marchington (1998) and an experienced and broad career
background of the HR head is cited by Beer (1997) and Lawler (1995) as being
influential in attaining a position within the senior management team.
128
CLASSIC
TRADITIONAL
MODERN
GLOBAL
WESTERN
ANGLO
TRANSCO
BANK
BANK
BANK
BANK
BANK
BANK
BANK
BANK
Direct
Direct
Direct
Direct
Direct
Direct
Direct
Direct
Two tiers
CEO
CEO
CEO
CEO
CEO
below CEO
CEO
CEO
Representation in
Presence only
Presence only
Presence only in
Presence only in
Presence only
Presence only
Presence only
Presence only
BOD / Management
in Management
in Management
Management
Management
in Management
in Management
in Management
in Management
Committees
Committees
Committees
Committees
Committees
Committees
Committees
Committees
Committees
MBBS Doctor,
15 years of
20 years of
20 years of
16-18 years of
6-8 years of HR
Corporate
Corporate
Corporate
HR and Non
15years of HR
12 years of HR
Experience
Experience
Experience
Experience
HR Experience
experience
Experience
3-4 years
2-3 years
3 years
2-3 years
4 years
2 years
3-4 years
2 years
3 years in
2-3 years in
2 years in
3-4 years in
TRADITIONAL
MODERN
WESTERN
ANGLO
10 years in
BANK, 7 years of
BANK, 15 years
BANK, 14
BANK, 10-12
TRANSCO
Corporate
of Corporate
years in
years in
BANK
Experience
Experience in US
Banking Sector
Banking Sector
Late 50s
Early 50s
Early 40s
Early 40s
Dimensions
Reporting Line /
Level in Hierarchy
Career Background
Service as HR Head
2-3 years in
Tenure inside /
6-8 years in
outside the
VINTAGE
organisation
BANK
CLASSIC
BANK, 12
years in
Packaging
Sector
Age
Late 50s
40s
Armed Forces, 10
years of
Corporate
Experience
4 years in
GLOBAL
BANK, 16
years of
Corporate
Experience
Early 40s
Late 30s
Source: Primary Data. The dimensions selected are an integrated from previous studies that examined the HR function and / or its role orientation.
129
The
For example, in
In the case of two case-study banks ANGLO BANK and GLOBAL BANK, data
revealed a relatively greater level of input by the HR Head and the function in
dispensing somewhat of a strategic role. In the case of GLOBAL BANK, the HR
head interviewed stressed that his position in the hierarchy and his representation on
the committees was not limited to being a silent observer. He explained that he had
managed to actively participate in the discussions and to voice HRs perspective; this
was a significant departure from the norms practiced in the other banks in the sector.
In the case of ANGLO BANK, the HR Head who is part of the management
committee is quite prominent in his participation according to the senior managers
interviewed in this bank. According to the HR managers interviewed in this bank,
the committee meets every month to discuss the development and growth agenda of
the bank. For his active involvement in these sessions, the HR Head conducts a premeeting exercise within the department based on which he prepares for the
management committee.
In the eighth and last case-study bank, VINTAGE BANK, neither the direct
reporting relationship, nor the representation of the HR Head in management
committees resulted in the function dispensing a strategic role. According to the HR
managers interviewed in this bank, the pronounced emphasis on improving the
implementation of the HR practices / systems, low expectations of senior
management from involvement in strategic level discussions and, to some extent the
131
personal attributes of the HR Head resulted in the lack of strategic role dispensation.
An HR manager elaborating on his views of the HR Heads role in management
committees stated that while the HR Head is part of most committees, his role in the
decision making process is not particularly significant, because of the focus on
policy implementation.
Our [HR function] direct reporting and representation in management committees is
not enough. I believe we are not taken seriously. We lack the will to assert
ourselves. The confidence to do so is just not there and so we are never really treated
at par with other line managers. (VINHR3)
In our analysis based on the data collected from VINTAGE BANK, we can infer that
the low expectations of the senior and line managers stem not only from an under
utilization of the hierarchical position of the HR function and the reporting channel
of the HR Head but they also relate to the broader contextual factors. This bank has
a legacy which it carries from its 40 years plus history as a public sector bank where
the then personnel function was never considered significant in the operations of the
bank.
dissemination of letters. The clerical nature of the work previously performed by the
HR function continues to present a hurdle in the uplift of its image as the bank still
has a significant presence of incumbents in its workforce. Therefore, the incumbent
line managers are not willing to adjust with the inclusion of HR in management
committees or to acknowledge its role (if any) in strategic level discussions.
132
5.1.2
It is imperative to study the career history of the HR Head in order to assess how and
if, certain career paths and experiences may yield a better comprehension of the
strategic context in which each of the case-study banks operates. Additionally, a
study of the HR Heads profile can provide insights into whether longer service in
the bank or a longer career in the HR function, for instance, can result in greater
institutional support by the senior management which can increase the credibility
and profile of the HR function. Consequently, the resolve of the HR Head and
discretion made available to them by the senior management to exercise their will
also seems to influence the profile of the HR Head and the profile of the HR
function. This section integrates the various factors (identified here) with a focus on
the profile of the HR Heads in three case-study banks (CLASSIC BANK, MODERN
BANK, and ANGLO BANK), where evidence existed of their influence on the role
performed by the HR function. The fourth case-study bank in focus, GLOBAL
BANK, is explored to examine the effects of institutional mechanisms in influencing
the role performed by the HR function.
Starting with the factor of career history, we found that in CLASSIC BANK, the
head of HR ascended up a broad corporate ladder and did not have a focused HR
career path. According to interviews of line managers in this bank, the HR Head
served in core business positions in other corporate sector organisations and seemed
cognizant of the pressures and constraints faced by line managers, in general. It
appears that by virtue of his holistic knowledge, line managers seem to value his
input on issues related with people management. Additionally, it appears from the
evidence gathered that it is the profile of the HR Head which has raised the profile of
the HR function at the strategic forums and that without his presence the HR
function might not have enjoyed the current elevated status it does.
It can be inferred from the discussion above that the bank lacks institutionalization of
the HR function within the strategic realm of management and that its current
(improved) profile is not grounded in the formal position accorded to it in the
hierarchy or management committees, rather it stems from the profile of the HR
Head. As a consequence, the power and influence wielded by the HR function is in
some respects dependent on the individual heading the department. Moreover, line
133
managers interviewed indicated that the HR Head appeared confident and selfmotivated and where possible, projected the perspective of the HR function in
strategic forums. Further, according to the HR managers interviewed in CLASSIC
BANK, in addition to his profile, the HR Head has built a substantive informal
network with senior and line managers which ensures open communication and
encourages exchange of ideas with them. Similar views were shared by senior
managers interviewed who stated that the HR Head enjoyed their confidence because
of the relationship he had managed to build with them. In some ways this indicates
that the HR Heads profile and the institutional mechanism of informal networks can
influence the HR functions capacity to perform what may be termed as some form
of a strategic role.
Moreover, these findings are substantiated through the interview of the HR Head
himself who stated that whatever position he had achieved was largely because of his
career profile which was instrumental in building his credibility in the eyes of senior
and line managers and not so much a result of institutional mechanisms / support.
This is evident from his comment,
The discretion I enjoy comes after a struggle, it was not provided effortlessly. Yes,
there is still resistance and there are ongoing battles. I have built a small but strong
team of corporate HR people and provided them a lot of leverage to perform. But
quite honestly, if I am not here tomorrow, they will need to create their position and
establish themselves again. (CLASHR1)
Our findings indicate that the profile of the HR Head was also instrumental in raising
the profile of the HR function in MODERN BANK.
In ANGLO BANK, the HR heads status is derived from a higher education degree
in HR and primarily his extensive experience of working as an HR professional
during his career. Based on the views expressed by HR managers interviewed in
ANGLO BANK and our inference based on a comparative analysis with the other
case-study banks, it appeared that the HR Head in ANGLO BANK had the most HR
specific expertise and a well rounded understanding of the HR milieu, at least
outwardly. Owing to his practitioner based approach, he was assessed by senior
managers interviewed as one who brought a practical perspective to the table and his
efforts led to the introduction of HR specific strategy planning tools like the HR
Balance Scorecard in the bank.
Amongst the four case-study discussed above, it is only in GLOBAL BANK that the
role of the HR function is widely accepted and the HR Head is expected to dispense
a more meaningful role at the strategic forums. Like CLASSIC BANK, the HR
Head in this case-study bank also has a broad business background and exercises
considerable authority in his domain. The influence exerted by the HR Head can
firstly be attributed to the institutional mechanisms that facilitated an enhanced
profile of the HR function, and is not largely dependent on the profile of the HR
Head, alone. This is possibly because the function is aligned with the international
practices and the HR Head reports to the global HR division, in addition to the CEO
in Pakistan. Hence, the presence of the HR perspective at the strategic level is owed
to the formalized existence of HR policies, frameworks and guidelines that are
documented in detail and leave little room for ambiguity.
initiatives undertaken by the HR function but his explicit support is not received with
much appreciation by the line management according to the HR managers
interviewed. One line manager commented that senior managers sometimes rely too
heavily on HR and give disproportionate weight to their opinion.
However,
according to the HR managers interviewed, this status has been accorded to them
because of a reputation for reliable delivery and objective assessment. The HR
function intervenes in the process of decision making if the decisions do not appear
to conform to the norms of the organisation. In the words of one HR manager
interviewed at GLOBAL BANK,
We try to accommodate all reasonable requests [by line and senior managers] but
then there are times when we have to take a stand in the best interest of the bank
being the guardians of organisational norms. We are viewed by the senior
management as responsible for keeping the organisation out of trouble. (GLOHR3)
Hence, in GLOBAL BANK, the inclusion of the HR Head at the strategic level
forums can be attributed to the institutional mechanisms which provide the HR Head
and consequently the HR function the capacity to dispense a strategic role. The
institutional mechanisms include the global HR policies, the norms of formalized
HR involvement at the global level and the support provided by the CEO / Country
Head in Pakistan.
We now discuss the three case-study banks where the HR functions profile in
comparison with the four case-study banks discussed above is much less. Again, the
influence of the HR Heads profile and institutional mechanisms forms the basis of
our analysis.
In the case of WESTERN BANK and TRANSCO BANK, the factors of age and
tenure of work experience of the HR Head resulted in the low profile of the HR
function. Evidence indicates that age was of consequence in both the case-study
banks (WESTERN BANK and TRANSCO BANK) where the HR Heads are young
individuals with less than fifteen years of work experience behind them. Also, we
found that the tenure of the HR Head whether inside or outside the organisation did
not appear to have any significant influence on how line and senior management
perceived the HR function and the role it was dispensing in both the banks. In the
case of WESTERN BANK, the HR Head is an outsider who joined the bank only
two to three years ago and in the case of TRANSCO BANK, the HR Head in an
insider who joined the bank fourteen years ago.
individuals have risen up the HR hierarchy within a short span of time; line
managers who are equivalent in the hierarchy are much advanced in age and
experience. In a status conscious society such as Pakistan, young age and low
experience act as a barrier to effective discourse.
interviews with line managers in these banks indicates that despite their higher
137
position in the hierarchy, both HR Heads have limited discretion in the performance
of their responsibilities.
Summary
To summarise, evidence presented in this section highlights that the position of the
HR Head in the organisational hierarchy, their representation on the Board of
Directors and their direct reporting relationship with the CEO have a possible role in
establishing their legitimacy and in influencing the role performed. However, we
also found that the representation of the HR Head at these strategic forums alone, did
not affirm the HR functions participation and influence. We found the HR Head not
to be a part of the Board of Directors in the eight case-study banks investigated
which we attribute largely to the fact that the HR function is still trying to gain
legitimacy within the management committees. Our finding relates more closely to
the views presented by Sheehan (2003) which highlight that representation in board
and management committees does not necessarily result in the HR function
dispensing what can be termed as a strategic role. Additionally, we found certain
other factors like an administrative legacy and the low hierarchical level of the HR
Head in the organisational hierarchy to have influenced the profile of the HR Head
and the HR function.
Further, based on our analysis of the factors which define the profile of the HR Head
and the institutional mechanisms that influence the HR functions capacity to
dispense a strategic role, we found the factors of a broad based business background
of the HR Head, a career in the HR profession and in some respects, the assertive
personality of the HR Head to dominate and influence the HR functions status. The
presence of these factors provides the HR Head a profile through which they can
leverage and exert their will; this is especially true in banks CLASSIC BANK and
MODERN BANK where the HR functions profile is not embedded in the institution
and the HR Head physically embodies the function. In GLOBAL BANK where the
HR function is integrated with the other organisational systems, the HR Head enjoys
more authority by virtue of his position rather than his profile and in ANGLO
BANK, both institutional mechanisms and the HR Heads profile appears to
influence the HR functions profile.
138
Out of the four case-study banks where the HR function appeared to have an
enhanced profile at the strategic level, in VINTAGE BANK, MODERN BANK and
ANGLO BANK, the function appeared to have been influenced by the profile of the
HR Head while in the fourth case-study bank (GLOBAL BANK) the influencing
factor seemed to be the institutional mechanisms. Of the three case-study banks
where the HR Heads profile was influential in defining the HR functions profile, in
two banks (MODERN BANK and CLASSIC BANK) the factor of broad based
corporate experience and understanding of the business context appeared dominant
while in the third case-study bank (ANGLO BANK) the factor of the HR Head
having a practitioner background appeared to have enabled him to influence the HR
functions profile. However, the common factor among all the influential HR Heads
is perhaps their will to take initiative and be visible in their conduct. Hence, the
resolve of the HR Head and the mindset of the senior management appear to be
variables that can influence the HR function and the role it performs.
139
Proactive Initiatives
Transformational Activities
Reactive Initiatives
Transactional Activities
VINTAGE
BANK
Downsizing , Streamlining
Initiatives
Operations
Organisational
Development Departments
Employee motivation
Initiatives
Deployment
-
TRADITIONAL
BANK
Change Management
Initiatives
Initiatives-
Analysis
Introduction of new performance
MODERN
Training-
Training
BANK
XY Survey, Talent
GLOBAL
Management Process
BANK
WESTERN
BANK
Employee Motivation
BANK
AZ Recruitment Strategy
Global HR Implementation
TRANSCO
Shifted to Regions
Initiatives
ANGLO BANK
Performance Management
Global HR Implementation
Employee Road Show, HR
Services Satisfaction Survey
Global HR Implementation
Global HR Implementation,
Programs / Restructuring-
Downsizing
140
Operational Efficiency
Operational Efficiency
Operational Efficiency, T&D
The HR function at GLOBAL BANK, in comparison with the other four domestic
and the three foreign banks appeared to have a long-term focus. The HR Head
141
represents the function at all strategic level committees and is actively involved in
the process of strategic decision making. The HR function has initiated several
schemes like the XY survey to achieve long-term objectives like promoting
employee engagement. The survey was introduced in GLOBAL BANK in Pakistan
as a global initiative; it actively records the perceptions of the employees and then
rates the activities of the HR function against them. This enables the HR managers
to gauge if the HR function is meeting the requirements and expectations of the
workforce. The survey has become a primary source of information for the HR
function and the results reported in the survey are used to institute policies and to
introduce initiatives for the long-run.
For instance, the bank has initiated schemes / policies to improve employee retention
and motivation as a direct consequence of the suggestions made by employees in the
XY survey. GLOBAL BANK also introduced practices such as succession planning
and talent management which have a long-term orientation and focus. An annual
exercise conducted in the bank classifies employees in bands or grades according to
their performance record and perceived potential for progress. After generating the
performance and potential matrices of the employees the HR function charts the path
of top performers through specialist and generalist roles.
In ANGLO BANK, the HR function despite its small size has shown a considerable
shift towards dispensing a role at the strategic level. In 2007, ANGLO BANK
launched the Country Business Plan (Pakistan), a strategic document outlining its
business objectives in Pakistan. The three year plan was envisioned with due input
from the HR function; the bank is also developing a similar document to chart their
investment over the next two years (the second stage of the first program). These
two strategic documents also entail a comprehensive, long-term role for the HR
function as reflected in the input obtained by involving the HR function in the
planning phase.
Scorecard and has customized it to define the HR objectives, measures and targets
which enabled the integration of the HR strategy with the banks strategy to ensure
the alignment between HR and organisational goals, in the long-term.
142
In the case of CLASSIC BANK, in 2007, the bank established the departments of
Organisational Development and Strategic Planning; the heads of these departments
report directly to the HR Head and are accountable for aligning the planning and
forecasting processes in the HR function with the requirements of the organisation.
The establishment of these departments is an endeavour by the bank to bring a longterm focus to the initiatives undertaken by the HR function. Additionally, the HR
Head has formed a corporate team consisting of dynamic individuals but they have
yet to play an active or prominent role in planning the long-term initiatives, at least
till the time of the interviews. The inclusion of the HR function in the strategic
planning process is currently limited to the HR Head but the team is being groomed
to become more central to the strategic decision making process, according to the
HR Head. In the case of MODERN BANK, the workforce planning exercise and
training programs conducted to identify the hiring requirements for Management
Trainee Officers (MTOs) and their subsequent training and
orientation
(approximately nine months long) were aligned with the banks long-term strategy.
The strategy entails to induct professionally qualified employees at entry level from
amongst whom the best performers can be groomed for strategic positions in the
future.
Apart from the notable exceptions reported above, evidence emerging from the other
case-study banks predominantly indicated that the HR initiatives were generally
geared towards addressing the short-term needs / issues in the banks. The HR
function in these banks had either not undertaken long-term HR initiatives in the
recent past (at the time of interviews) or if they had, the initiatives were not
successfully implemented. In VINTAGE BANK for example, a recruitment and
selection scheme was introduced to fill vacant positions at the middle management
level in some of the newly introduced product / service areas. This scheme was
introduced in parallel with the downsizing initiative taken by the senior management.
The HR function responded with a short-term focus and opted for external hiring
rather than considering the option of training and redeploying the employees
separated during the downsizing exercise. In taking this initiative, the HR function
compromised the long-term objective of securing employee commitment because
according to some of the line managers interviewed, the downsizing move and
external hiring sent a signal to the survivors that the bank was unwilling to invest in
143
training and retaining those who had been with them for the last 10-15 years. Aside
from the issues of low profile and less involvement of the HR function in the
strategic decisions (elaborated in section 5.1.) the HR function in this bank suffered
from a lack of time and resources; the HR managers stated these as the reasons for
the unsuccessful implementation of the long-term initiatives undertaken by the HR
function. The comment of an HR manager reflects these concerns.
I wish I had a recruitment and selection practice aligned with the long-term
workforce needs. I want to have in place a new recruitment and selection system
which takes into account internal and external factors but unfortunately, I dont have
the resources to do so and my staff is burdened with the routine work. So there is
not much input I can expect from them either. (VINHR4)
144
several banks. The HR Head stated that despite the availability of a Training Needs
Analysis system in the bank, line managers seldom integrated it in their decisions.
According to him, the line managers appeared unwilling to prioritize employee
development over business needs and in fact, mostly line managers even dictated the
nature, length and type of the training to be imparted. He added that the line
management focuses on the current training needs of the employees by sending them
to workshops or training that are related to their existing job activities rather than to
those workshops which can develop them for the future. Hence, we can infer from
the above discussion that the HR function has been unable to institute a long-term
training and development plan at the bank mostly due to the approach of the line
managers.
attempt to determine whether and if, the HR function in these banks was dispensing
what can be termed as a strategic role. Our study revealed the presence of proactive
HR initiatives in three case-study banks (MODERN BANK, GLOBAL BANK and
ANGLO BANK), while the HR function resorted to reactive initiatives mostly, in
the five remaining banks investigated. In the three case-study banks where the HR
function appeared to have a proactive approach in its work, the function was
involved from the on-set and led the initiatives from the conceptualization stage till
the implementation stage. Most line managers interviewed in the three banks stated
that while the HR function was not always proactively seeking to identify areas of
improvement in its domain, there were instances when the HR function introduced
certain initiatives and also convinced various stakeholders involved, of the utility of
the initiated programs.
For instance, in MODERN BANK, the role of the HR function was proactive in
terms of the long-term workforce planning as it staffed the newly opened branches
through internal recruitment, placement and retraining and resorted to minimal
external hiring, with only approximately 100 personnel hired from the market. This
initiative was undertaken due to the exponential growth in the branch network which
increased from 238 to 320 during the period of the research. In addition senior
managers at MODERN BANK stated that the bank was known for its proactive
employee related practices through which they were able to retain valuable
employees, even at a time when job mobility was high and the market conditions
were favourable for job seekers. Examples these practices include the introduction
of career management and development practices and the induction of a new
performance management system which integrated these practices with the
compensation practice.
practices was the low turnover rate in the bank which was below the prevailing
industry standard.
In the case of GLOBAL BANK, the HR function anticipated an increase in the need
for hiring middle managers due to the growth and expansion policy of the bank from
2005 onwards.
This is
because the strategy aims to identify and manage talent through the introduction of
various employee retention policies.
In the case of CLASSIC BANK, the HR function appears to have taken some
initiatives to enhance its strategic contribution through greater representation and
participation at the strategic level forums and the undertaking of some long-term
initiatives as discussed previously in this chapter. However, evidence related to the
nature of activities performed by the HR function (proactive or reactive) revealed
that the initiatives undertaken were mostly reactive in nature. According to the
senior and line managers interviewed, the HR function designed and implemented a
new performance management system in the bank after line and senior managers
highlighted the need for introducing an integrated system to measure and manage
performance, to reward, train and develop employees. Further, a senior manager
highlighted that the new performance management system did not clearly identify
measures to monitor employees on certain criteria related to financial irregularities
set in the code of conduct, issued by the regulator of banks.
outplacement services to aid those separated during the downsizing. Further, the HR
function did not, in the aftermath take any proactive initiatives to boost the morale of
the survivors.
The evidence from interviews with the HR Heads in the four foreign banks in our
sample GLOBAL BANK, WESTERN BANK, ANGLO BANK and TRANSCO
BANK indicates that these banks were required to conform to the Global HR
policies which appeared to curtail the proactive involvement of the HR function in
developing and introducing localized HR initiatives and policies.
Hence, the
In our sample banks examined, evidence revealed that only one case-study bank
(GLOBAL BANK), appeared to delegate operational work to the line managers to
some extent, to create time for performing transformational activities. The HR
function in the other case-study banks continues to largely occupy itself with the
149
interviewed in this bank, the shift to the three legged model was designed and
implemented with the intent to re-orient the HR function in the bank so it could
dispense a greater strategic role. One example which illustrates this intent is the
creation of the positions of business partners in the bank; they are each appointed
with the business heads of different divisions. These business partners, in the view
of the HR Head, were involved to a considerable extent in providing advice /
consultancy to the business heads and were able to commission HR work from the
centre of expertise and shared services, for their division.
Two case-study banks, MODERN BANK and CLASSIC BANK while mostly
focusing on improving the employee policies undertook some transformational
activities which indicate the initiation of a shift in the orientation of the HR function.
In the case of MODERN BANK, one example of such an activity was the induction
of a new performance management system which according to the HR managers was
geared towards enhancing the performance of employees and transforming the work
culture. Additionally, in CLASSIC BANK, as mentioned earlier, realizing the need
for operational excellence, the HR function refined HR policies and processes and
beyond that, it undertook some transformational initiatives which are evident in the
establishment of two new departments of Strategic Planning and Organisational
Development. These departments are accountable for aligning the change initiatives
introduced by the HR function with the banks strategic objectives.
initiative to upgrade the existing HR policies, they claimed that the focus of this
initiative was purely to improve the administrative aspects. Hence, HR function was
unable to re-orient itself and perform activities of transformational nature that could
contribute to the strategic organisational objectives. Additionally, the relationship
150
managers in the HR function in this bank jointly report to the respective line
managers but they are not performing the role of a business partner, a role which
encompasses the delivery of transformational work aimed at meeting the strategic
business objectives. Rather, the relationship managers are providing operational
support only.
providing services like compensation, payroll and employee relations are heavily
overstaffed which appears to indicate a continued emphasis of the HR function on
performing transactional work in the future as well. The figures available in the
bank documents provide credence to this claim.
positions. In addition, the individuals identified for succession in key positions were
to be trained and developed to manage a smooth transition to those positions.
However, the exercise was suspended after the identification of 543 unique positions
because it was not possible to manually track the career of employees in all these
positions and to manage a succession plan accordingly.
In three of the four foreign banks examined (WESTERN BANK, ANGLO BANK
and TRANSCO BANK), that have a small size in Pakistan, the HR personnel are
few in number and have to perform both transactional and transformational
activities. For example, WESTERN BANK and ANGLO BANK do not have a
corporate HR team as such and the HR Head in these banks is monitoring both the
transactional and transformational activities. For example, in their role as a business
partner, they are approached by the business heads for consultation on HR related
issues but they are also performing and monitoring the important transactional work
related to the HR function. This is largely because of less staff. Similarly, in
TRANSCO BANK, the HR function appears to be understaffed and hence it
concentrates more on meeting the day to day requirements / needs raised by the line
mangers rather than on performing long-term and transformational activities. Hence,
the small size of the HR function in the three small sized foreign banks appears to
influence the capacity of the HR function to perform transformational activities
which inhibits the function from dispensing a strategic role.
Summary
Evidence presented in this section indicates that the HR function in four case-study
banks investigated, (VINTAGE BANK, TRADITIONAL BANK, WESTERN
BANK and TRANSCO BANK) still appears to display a short-term orientation in
performing its activities, without considering the long-term implications of the
initiatives undertaken.
MODERN BANK and ANGLO BANK) indicate a subtle shift in the orientation of
the HR function with some initiatives illustrating a short-term focus and others,
somewhat of a long-term focus. The only exception (relative to the other seven
banks) is GLOBAL BANK where the HR function appears to have undertaken more
initiatives that are geared towards attaining a long-term orientation. This largely
appears to be the case due to the emphasis to align with the policies, practices and
152
processes administered at the global level by the bank and its structure. In the four
case-study banks where the HR function appeared to display a short-term orientation
in the dispensation of its activities, the reason seemed to be the dictation of line
managers to address their short-term needs which results in the function adopting an
approach whereby the needs are addressed in an urgent manner rather than with a
long-term perspective that addresses the issues as part of a strategic agenda. This
dictation from the line managers shifts HRs focus from long-term to short-term
orientation which impedes the functions intent to perform a strategic role. Another
reason emerging from the data seemed to be the insufficient resources at the disposal
of the HR function.
Additionally, apart from the few examples related to the proactive approach adopted
by three case-study banks, GLOBAL BANK, MODERN BANK and ANGLO
BANK, the HR function in the other case-study banks appeared to be directed by
senior leadership in their initiatives which rendered the function to be reactive in its
approach. The inclination to be reactive stemmed from the following reasons. Firstly
the HR is still struggling with the label of a support function and is involved in the
implementation phase of most initiatives. Hence, the leverage or opportunity to take
leadership and be proactive is minimal. Additionally, four foreign banks in our
sample are required to implement and conform to the global HR policies which
restrict the number and types of initiatives the HR function can undertake in the
subsidiary banks in Pakistan. This limits the intent of the HR function to develop a
strategic orientation. Evidence indicates that in the three case-study banks where the
HR function was able to act proactively in some ways, the proactive initiatives
undertaken were not directly related to the strategic business objectives of the
respective banks. Consequently, the role performed by the HR function in the three
banks indicated a shift towards a strategic role orientation but one which still
requires greater integration with the organisational objectives.
Moreover, our analysis revealed that apart from GLOBAL BANK, the other casestudy banks continue to focus on performing transactional activities. In the case of
GLOBAL BANK, it appears that the clear demarcation of the activities within the
function, defined according to its structure, enabled the HR function to spend more
time on performing transactional activities.
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case-study banks revealed that VINTAGE BANK has a one-way .linkage approach
and one foreign bank, GLOBAL BANK follows an integrative approach to strategy
formulation.
The
remaining
six
case-study
banks
CLASSIC
BANK,
The changes within the HR function have been rudimentary and superficial. In
previous times HR was not really considered important as a strategic function in
general and even in this bank. All we did was administrative work and they
[management] didnt let this function develop with the changing times. Now its
like a big leap that we have to take. It is difficult for business divisions to accept
HR in this [strategic] role. (VINHR2)
Level of
Rationale
Participation
VINTAGE
Due to;
BANK
Linkage
WESTERN
BANK,
Linkage
TRANSCO
Due to;
Due to;
BANK
strategy formulation
CLASSIC
BANK,
Linkage
Due to;
MODERN
BANK,
ANGLO BANK
GLOBAL
Integrative
BANK
Linkage
Due to;
* Column 2 adapted from the continuum suggested by Golden & Ramanujam (1985)
* Column 3 highlights findings from primary data
Evidence provided from the interviews of senior and line managers indicates that
TRADITIONAL BANK has a weak two-way strategy linkage as the HR function is
seldom involved in the strategy formulation phase. The Country Head HR is present
155
in some strategy formulation sessions but the extent of his involvement is quite low.
The line and senior managers interviewed were predominantly of the view that the
HR Head did not demonstrate sufficient capacity to provide valuable input in the
strategic matters even when he was given the opportunity to participate in such
sessions. In most cases the contribution of the HR function is operational in nature
as contended by the HR managers interviewed and even where the HR function is
involved, the thrust of decision making is mostly related to transactional activities.
The comment of an HR manager highlights this view.
During times when investment decreases and the bank requires hiring of
professionals who can seal larger deals, the HR function is involved, but the focus is
kept on hiring new employees with greater sales and marketing skills [required
during times when greater deposits need to be mobilized]. We are not asked to share
any options we may have, to resolve this issue and even if we do share them rarely,
they are not debated or discussed. (TRADHR3)
The HR managers at the bank stated that they realized that in order to provide
strategic input at such forums, the HR function needs to be involved and must be
assertive in sharing its perspective during the initial strategy formulation process.
Moreover, the communication of the agreed upon strategy to lower cadres even
within the HR function is compromised, despite the intention to do so. Hence, no
clear direction to follow appears to emerge for the HR employees. Also, the HR
managers reported that there were instances when the line management used its
political clout to interfere in the internal working of the HR function. Recruitment
and selection decisions are often dictated by line managers without seeking input
from the HR department. This top down approach tends to bother the HR managers
and negatively affects their relationship with the line managers.
Further, WESTERN BANK and TRANSCO BANK also follow a two-way strategy
formulation process but the involvement of the HR function in these banks, and the
influence it exerts in strategy formulation, is slightly better than that in
TRADITIONAL BANK. The HR function in WESTERN BANK and TRANSCO
BANK generally implements the HR strategies / practices adopted from their Global
Headquarters and thus far, the function itself (in terms of strategic role dispensation)
is in the development stages in these banks, in Pakistan. For instance, in WESTERN
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BANK, the HR team feels that the business heads (senior manager positions) have
started to value their contribution to some extent, in strategic matters. The HR Head
of WESTERN BANK stated,
We have a young HR team which is a blend of new and experienced people, very
motivated and performance oriented. We are confident that we are moving in the
right direction by developing this team. We work in close coordination with the
business heads [senior mangers] and aim to develop to perform the role of a
business partner, in the true sense of the term. (WESTHR1)
Even though this comment shows the confidence and positive intent of the HR Head,
the line managers interviewed consider that there is a gap between the rhetoric and
reality related to the HR functions participation and contribution at the strategic
level. They highlighted that the HR function is mostly focused on implementing
policies as cascaded down by the global headquarter and the HR personnel appear to
be more interested in policy manuals as opposed to providing any meaningful input.
Additionally, the focus of the HR Head on monitoring the transactional work (as
discussed in section 5.2.) appears to compromise his participation in the strategy
formulation forums and the relative inexperience of some of the young HR
personnel, on the small sized HR function, appears to compromise the capacity of
the function to assertively participate in the strategic forums.
From the remaining six case-study banks, three had a two-way strategic link
(CLASSIC BANK, MODERN BANK and ANGLO BANK). The extent of the HR
157
gained influence and has increased its participation in the strategy formulation
process according to the HR Head Strategy Planning. His comment below illustrates
his position.
We are no longer involved in decisions related to the HR function only. Recently,
the Consumer Banking Division was unable to meet its targets due to which senior
management was seriously considering to scale down its operations. However, as a
result of our involvement in the re-strategizing process, this option was not
exercised; rather, the division was given another opportunity to improve its
performance. (CLASHR4)
In CLASSIC BANK, the corporate HR team which reports to the HR Head consists
of a group of young professionals; the team formulates HRs goals and objectives
under the leadership of the HR Head and then clearly communicates them to line
managers as well as to other HR managers to ensure effective cascading of strategy.
This HR team enjoys a considerably high level of credibility amongst senior and line
managers in the bank, according to the HR Head. However, the HR Head was
conscious of the less than sufficient experience and skill-set of the young HR
mangers which in his view restricted the active participation of the HR function in
the strategy formulation forums, in his absence.
The HR function has come a long way from providing just administrative level
support. We are moving towards becoming strategic and senior management has
started involving the HR function in strategy formulation. However, we are still not
involved all the way through. Our input is definitely there and is considered but
perhaps our representation needs to be more widespread and consistent [in terms of
the standard skill-set of HR personnel]. (MODHR1)
GLOBAL BANK is the only bank in our sample which follows an integrative
strategy formulation process and in comparison with the other seven case-study
banks it appears to be more strategic in its orientation, with an overall high
involvement in strategy formulation. According to an HR manager interviewed, the
functions representative is present during all plenary sessions and deliberations that
take place when the business divisions present their annual business plans and the
HR function shares its perspective, apprehensions and views regarding the strategies
being formulated. One HR manager at GLOBAL BANK shared this comment.
159
We have an open culture here and due weight is given to the HR functions
concerns and feedback in policy matters. It is probably because we are involved in
the process all the way through. (GLOHR3)
Evidence from the data indicates that out of the eight case-study banks examined, the
HR practices of VINTAGE BANK and TRADITIONAL BANK seem to be less
aligned to the requirements of the bank. In five case-study banks (WESTERN
BANK, TRANSCO BANK, ANGLO BANK, CLASSIC BANK and MODERN
BANK) the HR function is partially aligned (medium, medium-low) to the strategy
of the respective bank. However, there is a variation in their degree of alignment as
160
evident from the table 5.4. It is only in GLOBAL BANK that the HR strategy
appears to be integrated with the organisational strategy.
In the case of the first category (low alignment), there was little or no strong
evidence of a link between the organisational and HR strategy in the case-study
banks.
product / service segments, the HR function was unable to develop any training and
development programs to retain the existing workforce in these areas. Rather, in one
of the few instances when the function was able to implement such a program, they
introduced legal bonds to retain the trained employees, in lieu of the investment
made on their training.
Data collected indicates that WESTERN BANK and TRANSCO BANK fit in the
second category of banks (low-medium). The low-medium category is allocated to
the HR function where some link with the organisational strategy exists (short-term
161
objectives) but the HR initiatives are unable to align with the long-term strategic
objectives of the banks.
Organisational
Degree of Alignment
Strategy
VINTAGE
Concentration
BANK
Internal Growth
Poor HR planning
Over staffing
TRADITIONAL
BANK
WESTERN
Niche / Consolidation
BANK
Niche / Divestment
TRANSCO
BANK
ANGLO BANK
CLASSIC
Niche / Growth
External Growth
BANK
Internal Growth
MODERN
BANK
GLOBAL
External Growth
BANK
Institutionalized HR systems
WESTERN BANK has grown at a slow pace in comparison with its competitors and
strategically the bank limits itself to a few market segments like corporate and high
end consumer banking which is commonly referred to as boutique banking in
162
Pakistan. In recent times (at the time of interviews), the bank appeared to have
primarily consolidated itself in these niche segments. The HR strategy entails that
the HR functions involvement be guarded and inhibited by adherence to the
international practices and processes. Further, most of the senior and line managers
interviewed stated that the workforce of the bank largely comprised of individuals
who were poached from other banks by offering lucrative packages but over a period
of time, the HR policies were unable to retain this workforce. According to the HR
Head, domestic banks offered competitive salaries and poached their middle
managers; also the limited growth opportunities in the bank due to its small scale of
operations, dissuaded these employees to continue in the long-run. Hence, while the
HR strategy managed to attract and hire these people in the short-term, it was
inadequate to accomplish the banks long-term objective of retaining the talented
workforce.
Similarly TRANSCO BANK which started its operations in Pakistan almost two
decades ago had to opt for scaling down of the banks operations 2007 onwards
which led to a reduction in the HR personnel as well. The operations were scaled
down due to the global recession which started in 2007. This bank is a small niche
bank that focuses on few high end customer segments and has curtailed its
operations in consumer banking, choosing to focus on corporate banking instead.
According to line managers interviewed, TRANSCO BANK offers the highest salary
in the industry to senior managers and is above its competitors in the case of middle
managers, yet the bank has faced challenges in retaining its workforce. The limited
growth potential along with decreased job insecurity due to divestment has resulted
in employees leaving the organisation.
ANGLO BANK, CLASSIC BANK and MODERN BANK form the third category
of banks (medium) which indicates that there is evidence of a relatively stronger
alignment between the HR and the organisational strategy, with a focus on attaining
both the short and the long-term organisational objectives. This is managed through
the addition of departments in the HR function that are focused at performing
strategic HR activities, and through the induction of modern planning tools such as
the balanced scorecard. Similar to the other two small sized foreign banks discussed
previously, ANGLO BANK also follows the strategy of niche marketing. However
163
unlike WESTERN BANK and TRANSCO BANK that have shown caution in their
growth (branch network and number of employees) ANGLO BANK has grown
steadily in both its operation and numbers.
interviewed, the bank has pursued an internal growth trajectory to expand their
branch network and corporate operations. They added that ANGLO BANK has an
internal HR strategy planning mechanism, the outcome of which is an HR balanced
scorecard, an explicit and formal strategy document outlining the targets and
expectations by the management from the HR function. Additionally, according to
the HR managers interviewed, the function uses this document to communicate
within and across departments as a written HR strategy enables a better
understanding between all the stakeholders. However, the HR function feels that
they are restricted in their endeavours to better align with the local business needs /
strategy at times, because of certain global HR processes. For example, the need to
shorten the hiring process in recent times (in view of the high job mobility in the
banking sector at the time of interviews) was not possible because of the lack of
approval by the Global HR Division.
CLASSIC BANK offers a large portfolio of products and has followed an external
growth and acquisition strategy to expand and diversify. According to the literature
reviewed in chapter 3, the bank is considered as a successful model of privatization
and in the last fifteen years, it has exceeded its growth targets. In recent years the
bank has concentrated on improving service quality by utilizing its extensive branch
network and developing operational excellence. An example is the establishment of
the Organisational Development and Strategic Planning Departments to integrate the
HR strategy with the organisational strategy by developing the employees in-line
with the requirements of the organisation.
acquisition policy (through which it acquires small, private banks) in place and it has
been able to successfully integrate the employees from the acquired banks through
cultural alignment programs and compensation re-adjustment. However, the HR
function feels that their processes and systems need to be institutionalized in order to
achieve a higher level of alignment (see section 5.1.). Hence, it can be said that the
HR function at CLASSIC BANK displays a medium alignment with the strategy of
the organisation.
164
Nevertheless, there
are certain areas which appear misaligned, for example the development of a
performance management system that motivates the employees and elicits their best
effort, the devolution of its implementation to line managers and then again the
reverse devolution to the HR function, without yielding much conclusive results.
The medium sized foreign bank GLOBAL BANK is the only bank in the fourth
category (medium category) as the HR function in this bank appears to have a
moderately strong link of its strategy with that of the banks long-term strategy. The
bank targets a wider customer base unlike the other foreign banks in our sample that
have restricted their operations to niche segments. GLOBAL BANK has followed
an inorganic path to capture a large market share according to the senior managers
interviewed. It is competing with local banks for local clients and is moderately
successful in doing so.
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Summary
Based on the analysis presented above, we can state that apart from GLOBAL
BANK, the HR function in the other case-study banks does not appear to be have
integrated much in the strategy formulation process. This is because the HR function
in the other case-study banks is involved at a later stage in the strategy formulation
process. Firstly, senior management within the banks confines planning and
strategizing to a few individuals and / or functions, choosing to involve HR only at
the discussion or development stage. Perhaps because they feel the HR functions
utility comes in at the time of implementation. Secondly, the HR function itself does
not seem to have the capacity to offer strategic advice at an earlier stage, in at least
seven of the case-study banks (to varying extent), due to the lack of a requisite skillset and in VINTAGE BANK, due to the legacy of performing in an administrative
role. Evidence indicates that the HR function is proficient in developing processes
and practices but it is unable to envision the contribution that HR can make to the
organisation through strategy formulation.
sized foreign banks, the pressure to conform to the global practices / policies leads
the HR function to spend more time on operational activities and their strategic
contribution takes a back seat.
Additionally, the evidence presented in this section indicates that the HR managers
in all case-study banks attempted to align the HR functions strategy with the
organisations strategy to some extent, in order to improve the contribution of the
HR function in strategic forums. However, this finding is applicable to the casestudy banks with a varying degree because the analysis indicated a low, mediumlow, medium high and medium alignment of the HR strategy with the organisational
strategy. Apart from the banks which were assigned the low category, in the other
case-study banks, the adherence to the Global HR policies and processes (in the
foreign banks), the introduction of departments within the HR function accountable
for achieving strategic alignment with the organisational strategic initiatives and the
introduction of advanced planning tools like the balanced scorecard led to the
establishment of an HR strategy which was linked (to varying extent) with the
organisational strategy.
GLOBAL BANK where beyond these factors, the participation of the HR function in
the strategy formulation process enhanced the prospects of the function to achieve a
166
relatively stronger alignment with the organisational strategy. Two key reasons for
lack of alignment between the two strategies which emerged from our findings
include the lack of institutionalization of the HR function in the strategic decision
making processes of the organisation and the greater focus on aligning with the
short-term organisational strategies.
5.4. Perceptions of HR and line managers related to the role orientation of the
HR function
This section articulates the perceptions held by the HR and line managers regarding
the integration and involvement of HRs perspective at the strategic level in the
organisational strategy.
perceptions of HR and line managers related to the role being dispensed by the HR
function in the case-study banks. In all case-study banks examined the HR personnel
interviewed regarded the function to be more strategic than what the line managers
interviewed credited it for. While most HR managers interviewed across the casestudy banks agreed that the HR function needed to perform a greater strategic role in
the respective organisations, they perceived that support and opportunities given by
senior management were limited in this regard. An exception was GLOBAL BANK,
the reasons of which are elaborated in the later sections. The discussion in this
section is developed keeping in view the findings in the previous three sections
which integrate three indicators identified in extant literature as those, an
examination of which can identify the orientation of the HR function (strategic or
administrative).
At CLASSIC BANK, the HR managers believe that the function has become more
strategic and has taken significant steps such as the establishment of an
Organisational Development and a Strategy Planning Department that specifically
design and implement initiatives to address the needs raised by the business heads.
However, the HR Head interviewed indicated that to establish a greater strategic
orientation of the HR function on a sustained basis, the HR managers needed to build
their business knowledge. His comment below indicates this requirement.
Business knowledge is the key, we can only move forward with better
understanding of business requirements, which can help us align the HR
policies with their needs. (CLASHR1)
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In contrast with the above, our interviews with the HR managers in the case-study
banks also revealed certain apprehensions and constraints which limited their
influence and strategic contribution.
interviewed perceived that the HR function was viewed with suspicion by line
managers who felt the function neither had the profile nor the capacity to participate
168
in strategic level discussions. Also, according to the HR managers, since the senior
managers are sceptical of the capacity of the HR function to understand business
related issues, they do not support their involvement in the strategy formulation
process which minimizes the strategic contribution of the function.
The perceptions of line managers regarding the role of the HR function in the casestudy banks examined are quite diverse.
and MODERN BANK were appreciative of the role HR plays within the
organisation although they believed that the HR function needed to do much more to
become significantly strategic. They perceived this was possible if the HR function
was able to develop a better understanding of the business requirements. Similarly,
in VINTAGE BANK, the line managers perceived the HR function had improved in
terms of providing solutions to operational problems but it needed to develop a better
understanding of the business context before it could actively and significantly get
involved in strategy formulation.
At GLOBAL BANK, in comparison with the other case-study banks, the perception
of line managers related to the HR functions strategic contribution was relatively
much higher. The line managers with whom the business partners were associated
perceived that the HR function had relatively increased its input in strategy
formulation and had made considerable efforts to bridge the gap between the HR and
organisational strategy. The line managers level of expectation from their business
169
partners was quite high and they hoped to gain further benefits from HRs continued
involvement. The HR managers perceived this expectation of the line managers to
be particularly aligned with their intent to dispense a greater strategic role in the
strategic matters of the organisation.
Further, the perception of line managers related to the role the HR function in three
case-study banks (WESTERN BANK, ANGLO BANK and TRANSCO BANK) was
relatively similar. In all three case-study banks line managers in general, perceived
that for dispensing a more strategic role, the HR managers needed to be more
proactive with better business acumen. This perception appeared more strongly in
WESTERN BANK and TRANSCO BANK where the HR teams are going through a
developmental phase with a number of young HR managers.
Summary
To summarise, the evidence presented in this section indicates differences between
the perceptions of HR and line managers related to the role performed by the HR
function. In general, the perception of HR managers across the case-study banks
(barring VINTAGE BANK, to an extent) was that the HR function had started to
dispense somewhat of a strategic role. They highlighted numerous reasons that
restricted the strategic contribution by the HR function; these included an inadequate
support and opportunities provided by senior management, the low profile of the HR
function in line mangers perception and the priority line managers assigned to people
management issues. The views of line managers indicated that the HR function was
attempting to change its role somewhat, to perform in a strategic capacity, but even
in the case-study banks where a shift was evident, it was predominantly perceived
that the function had yet to make a lot of effort to achieve a significant strategic
orientation. Common between both the stakeholders was the perception that the HR
function needed to build its business acumen, update its skill-set to perform in the
role of business partners and act more proactively to attain a strategic orientation. In
TRADITIONAL BANK, HR managers also perceived a lack of resources (example
IT infrastructure) which they felt needed to be upgraded.
170
5.5. Conclusion
Based on the evidence presented above, it can be stated that despite the aspiration /
intent of the HR function to attain a strategic orientation across the case-study banks,
our analysis did not reveal much significant presence of a strategic role being
dispensed by a larger majority of the banks investigated. GLOBAL BANK appeared
as an exception. However, there was evidence of a shift in the HR function towards
performing somewhat of a strategic role in three case-study banks (CLASSIC
BANK, MODERN BANK and ANGLO BANK). From amongst the remaining four
case-study banks, there appeared a relatively better attempt by the HR function in
TRADITIONAL BANK, WESTERN BANK and TRANSCO BANK to develop a
strategic orientation but due to certain limitations (mentioned below), they were
unable to attain any significant strategic orientation.
Further, our analysis of the three indicators chosen to assess the orientation of the
HR function revealed the following: Firstly, we found that the representation of the
HR Head at the strategic level, their reporting relationship, the hierarchical position
of the HR function and the profile of the HR Head have a role in establishing the
credibility of the HR function which influences the role it performs. Issues such as
the HR functions continued attempt to gain legitimacy in management committees,
the legacy effect and the low position of the HR Head in the organisational hierarchy
restricted the intent of the function to adopt a strategic role. Key factors in the
profile of the HR Head which have the propensity to positively affect the intent to
achieve a strategic role orientation, especially in the banks where the HR Head
physically embodied the function, include a broad based business background in
some instances and a career in the HR profession in other instances, an
understanding of the business context and an assertive personality. Where the HR
function is embedded in the organisational systems, institutional mechanisms such as
the positive mindset and support of senior management and the CEO and the
informal network developed with senior and line managers aided in attaining
somewhat of a strategic role orientation. Two other institutional mechanisms which
include public sector legacy and a low position of the HR function in the hierarchy
restricted the capacity of the HR function to shift towards a strategic orientation.
171
HR
managers also cited the need for more resources in order to enhance its strategic
contribution towards the achievement of the organisations strategic objectives.
Following our exploration of the current state (strategic or operational) of the role of
the HR function in this chapter, the next two chapters extend the analysis through a
consideration of the significant influencing factors. Taking a lead from the
conclusion reached in this chapter and the review of literature in chapter 2, the
intention is to report and highlight the factors that may influence the adoption of a
strategic role by the HR function.
173
This chapter is divided in two main sections which are further divided into subsections. Section one examines the distribution of core HR practices between HR
and line managers in the eight case-study banks; the practices include performance
management systems, training and development, recruitment and retention,
compensation and benefits and employee relations.
adopted a similar approach to study the degree of devolution that may have occurred
in the HR practices. Section two explores the challenges that confront the HR-line
relationship and impede the devolution of HR practices to line managers and the
influence of devolution on the strategic (or otherwise) role of the HR function. This
is analysed by highlighting the issues faced by both HR and line managers, the
differences in the perceptions of both stakeholders and the factors impeding the
devolution of HR activities to line managers.
(2011) and Keegan et al. (2011) adopt the view that diversity prevails in the level of
involvement of line managers and the shape and extent of devolution in international
studies examining the phenomenon.
One of the contentious issues emerging from our data and the literature reviewed in
chapter 2, which forms the foundation of our analysis in this section is the conflict
that exists in the distribution of the HR activities between the HR function and the
line managers which Hall & Torrington (1998) state dates back to the origin of the
function itself. Kulik and Bainbridge (2006) found that line managers were more
involved in the practices of performance management, coaching, training and
employee discipline and promotion decisions while Hutchinson and Wood (1995)
posit that the HR function takes the lead in performing the activities related to all HR
practices and even decides on whether it will implement the practices solely or in
conjunction with line managers. Thus, to evaluate the extent of devolution in the
case-study banks, five HR practices were chosen; they include performance
management, recruitment and selection, training and development, compensation
and benefits and employee relations. The choice of these practices is grounded both
in practitioner studies (CIPD, 2003; 2006; 2007) and academic research (CasconPereira et al., 2005; Hall and Torrington, 1998b).
Decision Making
Power
Implementation
of Operations
VINTAGE
CLASSI
TRADITIONAL
MODERN
GLOBAL
WESTERN
ANGLO
BANK
C BANK
BANK
BANK
BANK
BANK
BANK
Shared /
Mostly
Line
Line
Mostly
Shared /
Line
Line
Mostly
Shared /
HR
HR
Mostly Line
Mostly HR
Shared /
Shared /
HR
HR
CO
BANK
Mostly
Mostly
Mostly
Line
Line
Line
Mostly
Mostly
HR
HR
Mostly HR
Evidence examined indicates that mostly line managers held the power of decision
making in the case of performance management systems in six case-study banks,
with the exception of CLASSIC BANK and MODERN BANK. Further, in five of
the six banks (barring GLOBAL BANK), the HR function is responsible for
implementing the practice. However, a deeper analysis revealed that within these six
banks, there were distinct differences in the degree to which devolution had taken
place. For example, despite an outward occurrence of devolution to line managers in
VINTAGE BANK and TRADITIONAL BANK, no transition had actually taken
place because the line managers had always been responsible for making decisions in
this area. In all the foreign banks examined (WESTERN BANK, ANGLO BANK,
TRANSCO BANK and GLOBAL BANK) it appeared that devolution of the
decision making activity had taken place but GLOBAL BANK was the only
exception where the implementation of the practice was also devolved to a certain
extent, which made it a shared activity with line managers.
TRANS
In the case of WESTERN BANK, ANGLO BANK and TRANSCO BANK, the
devolution of the decision making dimension to line managers appears to have taken
place. The HR managers interviewed in these banks stated that the less number of
employees in the HR function mandated devolution of some activities to line
managers because of the limitation of resources, especially time. According to the
line managers interviewed in ANGLO BANK, while they had the discretion to
establish the performance targets, conduct the evaluation and determine the rewards
for employees, they do so in consultation with the HR function to ensure that all
legal and financial aspects are addressed. The HR managers in all three small sized
178
foreign banks added that at the start of each performance assessment period, they
provide a policy guideline to line managers, which enables them to set their
departmental goals in alignment with the strategic goals of the bank. However, this
guideline is used as a reference point and the line managers primarily decide the
goals / targets. The comment of a line manager in ANGLO BANK illustrates these
views.
My subordinates and I usually set employee targets for the year taking into account
business and organisational considerations. However, there are times when the HR
function feels these targets are wrongly estimated so we review the targets but we
are not liable to agree with HR or revise the targets. I believe that my employees
and I are in a better position to know what is required to achieve the departments
overall objective. (ANGLM3)
Further, according to the HR managers interviewed in these three foreign banks, the
HR function reviews the appraisal process periodically. In TRANSCO BANK, the
mid-year appraisal meetings are organised by the HR function to assess the issues
faced by the employees in performing their job. If the HR managers observe any
anomaly in the due process followed and they can suggest the reassessment of the
targets to the line managers. However, it is up to the line managers to adhere to this
advice as they have the discretion for decision making.
GLOBAL BANK is the sixth and only bank in our sample where the responsibility
of decision making appears to have been transferred willingly by the HR function to
line managers. According to the HR Head interviewed in this bank, the primary
179
The two exceptions in our sample banks where decision making in performance
management is a shared activity are CLASSIC BANK and MODERN BANK. In
both these banks, evidence emerging from the interviews with HR and line managers
indicated that even though performance management was a shared activity, the lead
role was performed by line managers. Additionally, according to line managers
interviewed, devolution of decision making had not completely shifted to them as the
HR function in these banks retained the regulatory and monitory role and the related
budgetary controls.
Moreover, in both these banks, unlike the other five case-study banks investigated,
activities related to the implementation of this HR practice are a shared activity
between HR and line managers, with HR taking a lead role. According to the HR
managers interviewed in both banks, they introduced new performance management
systems where the HR function was assigned a greater responsibility in ensuring
transparency and consistency.
performance appraisal forms after which the HR function addressed any anomalies
180
or deviations from the policy guideline, by asking line managers to review the case.
The authority given to the HR function to approve the appraisal rating gives it a lead
role which according to line managers interviewed, discomforted them. This is
because, the line managers are at the front-end and have to face the grievances of
dis-satisfied employees. Further, in both banks, the positions of HR Relationship
Managers were created and they are now responsible to address performance related
problems which occur between and within the branches. Data indicates that the HR
Relationship Managers have to some extent devolved the implementation of HR
activities (performance management in this case) to the branch managers, but they
continue to intervene in activities related to reassessment of the targets, resolution of
employee grievances and disbursement of rewards. Hence, it appears that due to a
strong Corporate HR function and positions of Relationship Managers in these two
banks, the implementation of performance management is a shared activity between
line and HR managers, with HR taking the lead role.
Thus, our analysis above reveals that the devolution of decision making in
performance management systems, from the HR function to line managers occurred
in at least six case-study banks examined. The extent of this devolution varied
across the six banks. No apparent transition occurred in the case of VINTAGE
BANK and TRADITIONAL BANK, where line managers always performed this
activity but devolution occurred in WESTERN BANK, ANGLO BANK and
TRANSCO BANK, due to the few numbers of HR personnel in these banks. In
GLOBAL BANK devolution occurred as a willing action on the part of the HR
function to create time for more valuable work and line managers, to enhance
interaction with their employees. In addition, we found that even where devolution
in decision making had occurred, decisions pertaining to budgetary and legal
requirements were retained by the HR function which indicates that the extent of
devolution was less. Further, our analysis indicated that despite the devolution of
decision making to line managers in this practice, the implementation primarily
remained with the HR function in at least five banks. The concern of HR managers
was that the time spent on the associated administrative / operational activities
restricted their input in other meaningful activities. The lack of automation and an
under developed IT infrastructure were cited as reasons that further increased the
time needed to implement this HR practice. However, in the remaining three case181
Decision
Making Power
Implementation
of Operations
VINTAGE
CLASSIC
TRADITIONAL
MODERN
GLOBAL
WESTERN
ANGLO
TRANSCO
BANK
BANK
BANK
BANK
BANK
BANK
BANK
BANK
L&D
Separate
from HR
L&D
Separate
from HR
Mostly
HR
Mostly
HR
Separate
Mostly HR
L&D
Dept
Mostly
Line
L&D
Mostly HR
Separate
from HR
Shared
Mostly
Mostly
Mostly
HR
HR
HR
Mostly
Mostly
Mostly
HR
HR
HR
182
Our analysis indicates that in the case of training and development, on both the
dimensions of decision making and implementation, the HR function appeared to be
more involved in five case-study banks (CLASSIC BANK, TRADITIONAL BANK,
WESTERN BANK, ANGLO BANK and TRANSCO BANK). In GLOBAL BANK
line managers seemed to be largely responsible for decision making in this practice
and they even shared to some extent, in the implementation. In the remaining two
banks (VINTAGE BANK and MODERN BANK) a separate department outside of
the HR function was created (Learning and Development) to manage both the
decision making and the implementation of this HR practice.
In the case of MODERN BANK, the HR Head stated that the L& D department was
created to provide space to the HR managers to concentrate more on designing and
implementing the core HR practices. He added that the separation of the L&D
183
department increased the effectiveness of the practice because the L&D Head was
closely involved with the line managers in the final selection of employees based on
criteria like suitability, relevance and the number of trainings an employee had
already attended during the year.
The data analysed showed that despite the L&D departments being located outside
corporate HR, they largely influenced the decision making and administration of the
training and development practice, with minimal involvement of the line managers.
Hence, devolution to line managers did not occur in these two banks just as it did not
take place in the other five case-study banks, barring GLOBAL BANK. The line
managers interviewed in these two banks stated that the L&D department required
them to conduct the training needs analysis exercise based on which the training
schedule, the content and the methodology was decided by the department.
form was then passed on to the HR function which arranged the training for
employees.
TRADITIONAL BANK added that they had the discretion to approve or decline the
request for employee training and that the decision to decline was mostly due to
budget restrictions and / or the requirement of the bank for such training. An
example of the discretion of the HR function in the decision making aspect
associated with this HR practice, which highlights that the HR function was
instrumental in determining the type and frequency of the training, is evident in the
comment of a line manager below.
The training budget is allocated at the start of the year. Recently when we requested
for some individuals to be sent to a training session abroad, for a six week course in
corporate risk management, the HR department declined on the pretext that the
department had utilized its annual budget allocation. I think, customized training
sessions would be more beneficial rather than programs conducted for mass
consumption. (CLASLM3)
In the case of the three, small foreign banks investigated, the HR managers stated
that while the line managers were asked to identify the skill gaps in employees for
training purposes, they also had guidelines from the Global HR function which they
had to adhere to. As a consequence, they had the authority to either approve, decline
or pend training requests based on the alignment with the global training preferences.
They also stated that while training which was with a short-term focus was
recommended by line managers, the career development of employees which had
long-term implications was managed by the HR function. In addition, in all the five
case-study banks, the HR managers highlighted that while line managers appeared to
be interested in giving their input in the decision making activities, they seemed to
have no liking for sharing in the implementation aspect.
As stated above, the only exception to the degree of devolution in the training and
development practice across the case-study banks was GLOBAL BANK. Evidence
examined indicates that at GLOBAL BANK, devolution occurred in the training and
development practice which was led by the line managers. An in-house training
academy was established which operates on a small scale and is managed by line
managers themselves. The HR head interviewed stated that training is regularly
185
conducted by the academy for consumer banking employees, in the area of product
knowledge and awareness. Line managers choose the trainees, execute the training
according to a given schedule and evaluate the effectiveness of the training. The
lead trainers are key line managers who developed those products. In his view, line
managers are in a better position than the HR function to ascertain the training needs
of their subordinates and to emphasise on the critical aspects in which training is
required to enhance the relevant employee knowledge and skills. Additionally, the
line managers interviewed in GLOBAL BANK also appeared to be willing to
assume a relatively larger role in the decision making aspect but they showed less
inclination to assume the operational aspects of this HR practice. Moreover, despite
the fact that some operational activities were devolved to the line managers, the HR
head interviewed stated that the function had to really convince the line managers to
accept this partial responsibility.
As discussed above, in the case-study banks investigated, the practice of training and
development predominantly appeared to be owned by the HR function with little
devolution to line managers, both in terms of decision making and implementation.
While evidence indicates that in five case-study banks (CLASSIC BANK,
TRADITIONAL BANK, WESTERN BANK, ANGLO BANK and TRANSCO
BANK) the line managers decided on the training program and the employee who
would attend it, the discretion to approve the training in view of the budgetary
constraints and global HR guidelines (foreign banks) was with the HR function; this
indicates a low level of devolution, if at all. Lack of devolution to line managers
appeared even in VINTAGE BANK and MODERN BANK that had separate L&D
departments. Despite the detachment of this practice form the HR function, the
function could not achieve much success in exploiting this opportunity to increase its
strategic input due to a low profile in VINTAGE BANK and a focus on addressing
short-term requirements / objective in MODERN BANK.
Further, evidence presented also indicated that while the HR function was willing to
devolve the implementation aspect in all case-study banks, line managers were not
willing to accept this responsibility. Additionally, the interviews with HR and line
managers did not highlight any visible intent of the HR function to devolve the
decision making aspect in the case-study banks, except in GLOBAL BANK. Hence,
186
include advertising for the positions, short-listing of candidates, arranging the tests/
group discussions / interviews, drafting the employment contracts and organising the
orientation session. In the case-study banks investigated, several variations of the
degree of devolution in decision making and implementation (operational activities)
were evident from the data collected. The degree of devolution in the case-study
banks is tabulated in table 6.3 below.
CLASSIC
TRADITIONAL
MODERN
GLOBAL
WESTERN
ANGLO
TRANSCO
BANK
BANK
BANK
BANK
BANK
BANK
BANK
BANK
Decision
Mostly
Shared /
Shared /
Mostly
Shared /
Shared
Shared /
Making Power
Line
HR
HR
Line
Line
/ Line
Line
Implementation
Mostly
Shared /
Shared /
Shared /
Mostly
Mostly
Mostly
of Operations
HR
HR
HR
HR
HR
HR
HR
Mostly Line
Mostly HR
In general, an analysis of the data collected reveals that the recruitment and selection
practice was a shared activity between HR and line managers in a five case-study
187
banks (see table 6.3), in terms of decision making. The three exceptions where the
line managers appear to dominate the decision making aspect were VINTAGE
BANK, TRADITIONAL BANK and GLOBAL BANK.
interviewed in the other five case-study banks stated that a prevailing perception for
the lack of devolution was the HR functions apprehension to do so in the interest of
keeping the function instrumental in people management issues. From within the
five case-study banks, the HR function appears to be more dominant than the line
managers in CLASSIC BANK and MODERN BANK while the opposite holds true
in the remaining three case-study banks (three small sized foreign banks. However,
in the case of implementation of this HR practice, there appears to be a greater
reliance on the HR function in five case-study banks, in the implementation process;
even in the three banks where it is a shared responsibility, the HR function appears to
be leading the line managers.
According to the HR managers interviewed in the three case-study banks where the
decision making aspect is managed by the line managers mostly, despite taking
ownership of the decision making process the line managers appeared unwilling to
perform in an administrative / operational capacity in VINTAGE BANK and
TRADITIONAL BANK. However, evidence examined indicates that in GLOBAL
BANK, line managers undertook some operational tasks but not with much
willingness.
The
HR
managers
interviewed
in
VINTAGE
BANK
and
Additionally, the HR function in these two banks more often than not only provides
administrative support, for instance in a recent recruitment drive at VINTAGE
BANK, the line managers finalized appointments in specific branches without
consulting the HR function. However, when the internal audit department raised an
objection on the contravention of procedures related to appointment of employees,
188
GLOBAL BANK is the third bank in this category, where line managers are mostly
responsible for decision making. However, unlike the two banks discussed above, in
GLOBAL BANK, implementation is a shared activity with HR managers in the lead
rather than it being performed by the HR function mostly.
According to line
managers interviewed in this bank, devolution of decision making has taken place in
and the HR function empowers them to take key decisions regarding workforce
expansion, selection processes and the final hiring. They added that they also assist
the HR function in certain administrative tasks such as short-listing of the candidates
and conducting the initial interviews which to us (researcher) indicates that a shared
and collective approach was followed in the implementation aspect of this HR
practice. Subsequently, the HR function drafts the contracts for employees, arranges
the orientation and socialization events for the new inductees and oversees any other
legal requirements. The HR Head elaborated this notion of empowerment in the
following comment.
I want the line managers to lead in the hiring and firing decisions. Not only that, I
am also in favour of transferring the paper work to them. In this way my department
will be able to concentrate more on providing strategic level input. They should
take care of the recruitment and selection process from A to Z. At this point in time
we have been partially successful in doing so. (GLOHR1)
In WESTERN BANK, ANGLO BANK and TRANSCO BANK, line managers and
HR managers jointly undertake decision making with the line managers having a
lead role in initiating the recruitment and selection process, selecting the recruitment
methods and finalizing the candidates. The relatively less devolution in recruitment
and selection can be ascribed to the following reason.
According to the HR
managers in the small sized foreign banks, the employees in the corporate HR
function are few in number, younger in age and experience and thus due to resource
and time constraints the HR function willingly delegated decision making to line
189
managers.
managers assess and fulfil their workforce requirements at the lower employee levels
but the HR function is involved in hiring decisions for key middle management and
senior management positions. An example of the shared decision making aspect in
one of the case-study banks ANGLO BANK illustrates that line managers request
the HR function to advertise for branch positions and once the resumes are
shortlisted and the initial interviews are conducted, the line managers take the lead
role.
Subsequently, the HR function and line managers sit together to finalize the
appointments based on the results attained by the candidate in all three selection
stages before the HR function communicates the decision to the successful
candidates. Hence, in ANGLO BANK the line managers take the lead role in
initiating a recruitment drive and deciding the final candidates but they do so in
consultation with the HR function.
findings indicate that the HR function was mostly responsible for the associated
operational activities. Further, an examination of the data and triangulation with
bank documents in the other two small sized foreign banks reveals that a similar
process is followed with minor differences.
The remaining two case-study banks, CLASSIC BANK and MODERN BANK are
distinguished from the other six banks above because of the shared decision making
process which is dominated by the HR function rather than line managers. The
dominance of HR is because of its capability to overrule the decisions made by line
managers. The example cited below by a line manager in MODERN BANK, related
to the discretion the HR function exercises in decision making, is generally
illustrative of the views of line managers interviewed in the two case-study banks.
We recently asked for recruitment for the position of operation managers on an
urgent basis and recommended that these positions be openly advertised because we
needed fully trained managers and did not have the time to invest in the training of
the newly hired employees. However, HR filled the positions internally claiming
that there was overstaffing in other functions which made workforce reallocation a
190
more viable option. In view of our insistence they made sure that the operations
managers reported within two weeks to their branches. (MODLM1)
Related to the implementation aspect of this HR practice, our findings from the
interviews with both HR and line managers indicate that the HR function, in
partnership with line managers, arranged the interviews and tests, drafted the
contracts, conducted the orientation sessions and oversaw the legal requirements.
Thus, we suggest that apart from GLOBAL BANK, where implementation is a
shared activity, these two banks are the second example where it appears that
devolution of some implementation aspects to line managers has taken place.
Although the HR managers continue to manage more of the administrate work in
comparison with the line managers, they stated that they were able to shift the
administrative tasks related to interview scheduling and short-listing to line
managers.
reluctant one on the part of line managers who hoped to gain more leverage in
decision making ultimately.
CLASSIC
TRADITIONAL
MODERN
GLOBAL
WESTERN
ANGLO
TRANSCO
BANK
BANK
BANK
BANK
BANK
BANK
BANK
BANK
Decision
Mostly
Shared /
Shared /
Shared /
Mostly
Mostly
Mostly
Making Power
HR
HR
HR
HR
HR
HR
HR
Implementation
Mostly
Mostly
Mostly
Shared /
Mostly
Mostly
Mostly
of Operations
HR
HR
HR
HR
HR
HR
HR
Mostly HR
Mostly HR
responsibility in the formulation and execution of the rewards strategy of the banks.
The variation emerging from the interviews of HR managers in these banks was
related to the criteria (performance, seniority, competence or a mix of the preceding)
applied to determine the increments and bonuses, the differing mix of the
components (bonuses, increments, types of benefits) and the frequency of the pay
outs. However, the processes followed were largely similar and the role of HR and
line managers also appeared to be very similar in nature, with the HR function
having the final approving authority. An example related to pay determination in
TRANSCO BANK highlights the discretion of the HR function in this regard and
points to the low devolution to line managers in the decision making aspect of this
practice.
I cannot even count the instances when some of our talented employees were head
hunted by our competitors just by offering a competitive pay package. The HR
department does not take into account the issues we face in training and bringing the
new hired employees on board. It is not seldom, that a subordinate of mine is
offered a better salary package by a competitor and when the HR people are asked to
upgrade or adjust their package, they often do not do so. The HR personnel refer to
policy guidelines for pay determination, maintaining pay equity and budget
constraints to justify their actions. As a result the employee leaves. (TRANSLM1)
Interviews with the HR managers in these banks revealed that the increments were
generally approved by them on the recommendation of line managers but since the
HR function had the overall view of the budget, they made the final decision and had
the discretion for downward revision in the recommended rewards and benefits.
According to line managers interviewed, the senior management generally sided
with HRs views compensation matters and the leverage HR enjoyed in this area
stemmed from senior managements inhibition to decentralize financial powers.
They felt this was necessary for avoiding inconsistency and disparity in pay
administration.
benefits, our findings based on interviews with HR managers indicate that the
associated administrative activities like payroll administration and disbursement of
bonuses etc. are preformed mostly by the HR function. According to the senior
managers interviewed in VINTAGE BANK, TRADITIONAL BANK, WESTERN
BANK and TRANSCO BANK, the lack of devolution in compensation and benefits
193
appears to have affected the HR-line relationship because HRs dominance in the
decision making aspect created discontent in line managers who believed that
talented performers were lost due to HRs rigid approach.
the case-study banks studied mostly because the senior managers are not
appreciative of the idea of devolution in this area. Line managers in most banks
interviewed felt that their concerns were not addressed and it was evident that they
would appreciate more participation in the decision making aspect. However, like
the other HR practices investigated, the line managers appeared reluctant to
participate in the implementation of the compensation and benefits practice because
they felt that if they could not participate in the decision making then the HR
function should take responsibility of communicating the decisions which in many
instances were viewed unfavourably by the employees. In their view, they had to
maintain a good working relationship with their subordinate / team members for
meeting the departmental objectives.
relations
are
concerned
with
maintaining
employer-employee
CLASSIC
TRADITIONAL
MODERN
GLOBAL
WESTERN
ANGLO
TRANSCO
BANK
BANK
BANK
BANK
BANK
BANK
BANK
BANK
Decision
Mostly
Mostly
Shared /
Shared /
Shared /
Shared
Shared /
Making Power
HR
HR
HR
HR
HR
/ HR
HR
Implementation
Mostly
Mostly
Mostly
Mostly
Mostly
Mostly
Mostly
of Operations
HR
HR
HR
HR
HR
HR
HR
Mostly HR
Mostly HR
195
An analysis of the employee relations practice across the case-study banks revealed
that implementation primarily remained the activity of the HR function but the
decision making aspect was shared with line managers in all the foreign banks and in
one domestic bank MODERN BANK which had a reputation for designing
employee friendly practices according to the industry experts interviewed. In the
other three domestic case-study banks examined (VINTAGE BANK, CLASSIC
BANK and TRADITIONAL BANK), employee relations were mostly handled by
the HR function but in terms of decision making and the implementation
(administrative / operational) aspect.
Interviews with the line managers and HR managers in the foreign banks GLOBAL
BANK, WESTERN BANK, ANGLO BANK and TRANSCO BANK, indicated that
the systems of employee engagement were better developed relative to the domestic
banks in Pakistan. They explained that this was largely due to the influence of the
Global HR function and the need to conform to an organisational culture that had
cascaded down to the subsidiary banks in Pakistan. Additionally, HR managers
interviewed in at least two of these banks (GLOBAL BANK and ANGLO BANK)
stated that enhanced employee engagement was a key objective in their HR strategy.
In the views of senior management, extracted from the interviews taken, they were
responsible for inculcating and cultivating a culture of openness, sharing and
innovation at the bank. Additionally, the senior managers interviewed in the three
small sized foreign banks stated that while employee well-being was an activity for
which the HR function was responsible, they equally considered it an area of
accountability for themselves because the bank was like a small family where all
employees knew each other so there was a quick reaction to any incident (good or
bad).
In the four foreign case-study banks examined, the HR managers interviewed added
that they take regular feedback (every quarter or semi-annually) from employees
through employee satisfaction survey forms to remain informed of the employee
perceptions and concerns.
mechanisms were better established at their banks as opposed to the domestic banks
owing to the more well established and practiced related policies at the global level.
196
This indicates that conformance to the global policies dictated by the corporate
headquarters was a key factor in the development of practices and policies in the
domain of employee relations. Further, according to the line managers interviewed
in the foreign banks, employees believed that these mechanisms were well practiced
as opposed to just being stated as a matter of policy.
in conducting surveys to gauge the satisfaction level of employees and their line
managers tried to keep them informed about the impending changes in the bank.
However, they indicated that employees expected improvement in the grievance
redressal mechanisms which employee surveys highlighted did not mostly result in
any positive outcomes for them. Even in this bank, the implementation aspects
remained the responsibility of the HR function largely.
conducted with the senior managers in this bank we found that, since its inception as
a private bank in Pakistan, the management had encouraged hiring and promoting
professionals because key managers hired (at the time of inception) were attracted
from foreign banks in Pakistan and abroad at that time as well. This in our analysis
could be a reason for the relatively different mindset and approach of the line
managers in this bank as compared with the other domestic case-study banks.
Summary
An analysis of the degree of devolution in the HR practices across the eight casebanks examined revealed that devolution of HR practices to line managers had not
significantly taken place in the case-study banks, especially on the aspect of
implementation of the HR practices.
devolution had taken place, the degree of devolution was low because the discretion
to manage the financial and legal decisions was restricted to the HR function.
In
general, evidence examined in the case-study banks indicated that devolution in the
practices of performance management systems and recruitment and selection had
taken place to a greater extent, on a relative scale, as compared to the practices of
training and development, compensation and benefits and employee relations (in the
domestic case-study banks). Additionally, even where devolution occurred, it was
mostly in the decision making aspect and even there line managers were not willing
to share in the associated implementation aspect. Thus there was a varying degree to
which different HR practices were devolved across the case-study banks and
devolution in the implementation aspect was insignificant.
Moreover, our analysis also indicated that in two case-study banks (VINTAGE
BANK and TRADITIONAL BANK) what appeared to be devolution of decision
making to line managers in certain HR practices was actually not so. In fact, in these
banks the line managers had traditionally always dominated the decision making in
198
core HR practices primarily because the HR function did not have the influence or
the profile (see chapter 5) to gain a share in the decision making aspect at these
banks.
function. In the case of the three small sized foreign banks devolution of HR
practices to line managers was a consequence largely of the small and young HR
workforce which resulted in issues like time, capacity and resources for the HR
function that warranted the transfer of decision making to line managers. GLOBAL
BANK was the only bank (we mention as an exception above) where in comparison
with the other banks investigated, a greater degree of devolution appeared to have
taken place in the decision making and implementation aspect of the HR practices.
In this bank devolution of the decision making aspect was willingly transferred by
the HR function to line managers with the objective to increase HRs contribution in
strategic and value added activities. However, despite the willing delegation by the
HR function, line managers appeared less willing than HRs expectations from them,
to share in the associated operational responsibilities. Nonetheless, relative to the
other seven case-study banks examined, the line managers appeared to involve
themselves to a greater extent in the operational activities possibly due to the
influence of the HR function in this bank and the global norms / processes en vogue
in this bank.
willingness for devolution stemmed from the confidence reposed by senior and line
managers in their abilities to provide strategic input through the business partners
which eroded the fear if any, of their redundancy. Also, it appeared that the HR
function in this bank intended to utilize the time created due to devolution for
performing in strategic initiatives that could enhance their image in the eyes of
senior and line managers.
skills, lack of training for them and the inconsistent policies of the HR function. The
views expressed by the HR, line and senior managers in the case-study banks were
mostly similar, so our analysis presented below may appear quite generic. Thus, the
similarity in views makes the specific comments from stakeholders reflective of the
views across the case-study banks, but with minor variations. Hence, it was difficult
to capture the insignificant differences but where possible and clearly discernible, the
distinction between the emerging clusters of the investigated banks is highlighted.
They key findings from our data pertaining to the disdain of line managers
highlighted that, in the domestic banks, the historical dominance of the line
managers, their mindset, and the slow pace of development from the personnel to the
HR function created issues of perception. This resulted in the low profile and
influence of the HR function which created the disdain of line managers for
performing HR work. While the profile of the HR function was slightly better in
CLASSIC BANK, the dominance of line managers combined with the slow pace of
development of the HR function due to the presence of incumbents in large numbers
who resisted the changes, was apparent in this case as well. Additionally, in the
foreign banks WESTERN BANK, ANGLO BANK and TRANSCO BANK a low
degree of devolution in the decision making aspect occurred because of the less
numbers of HR personnel but the disdain of line managers for sharing in the
200
The following paragraphs provide an elaboration of the findings in the banks where
disdain of line managers appeared to be relatively high and include the comments of
both the stakeholders. In general, according to the interviews of HR managers
across the case-study banks, the disdain of line managers for HR work appeared due
to their perception that HR work was less significant and also because it diverted
their attention from their primary responsibility of meeting business targets / goals.
In addition, line managers interviewed in VINTAGE BANK, CLASSIC BANK and
TRADITIONAL BANK which had a rather low profile associated with the HR
function (see chapter 5), partly due to the slow pace of development of the HR
function, revealed that HR work was not worthy of their attention because
performing support activities was a demotion of sorts for them. They stated that
there was a certain sense of superiority attached with performing business related
work in their bank while HR work was mostly operational and administrative in
nature which did not require much valuable input. This perception held by the line
managers seemed to negatively influence the image of the HR function and created
disdain for HR work which is evident from the following comments by line
managers in two case-study banks.
I can understand that HR has some significance for the bank but for me, it is a
superfluous chore. Why should I be doing it, its not my job to do such type of
work, its the job of those HR people. (CLASLM2)
201
I take care of important clients and accounts in the bank. My utility is in that area
which by the way is actually important for the organisations success. This HR
related work is much like non-technical work which does not require the
involvement of line managers who are focused on achieving the real and meaningful
organisational objectives. If I started focusing on petty HR issues who will do my
work? (VINLM1)
As stated earlier in this section, a significant and underlying reason from which the
disdain for HR work stemmed was the mindset of line managers and their perception
of the significance of the HR functions contribution in the banks examined. This
mindset affected HRs profile and hence the leverage it held to influence line
managers to share in the dispensation of HR work. In the case of mindset, a frequent
view expressed by the HR managers interviewed in the three domestic case-study
banks VINTAGE BANK, CLASSIC BANK and TRADITIONAL BANK (where
disdain for HR work appeared to be relatively more), was that despite its
representation at some strategic forums the senior management in general and the
line managers in particular were not convinced of the value HR could add with its
meaningful participation. This to them meant that the mindset of line managers did
not encourage them to share in HRs work which was in their eyes probably not of
much value to the organisations performance.
It has more to do with their [line managers] mindset, they do not really believe in
taking more ownership of HR work. They rather just give recommendations for
approval and implementation without any scrutiny and would not come near any
implementation aspects on one pretext or another. (TRADHR2)
These divergent
perspectives also explain the views of both stakeholders related to the question of
why devolution of the HR activities did not occur to a greater extent. Inferring from
the interviews of line managers we state that their disdain for implementation of HR
work probably stemmed from the fact that HR managers expected them to share in
the implementation of HR practices but did not want to devolve the associated
decision making. This was evident in the low degree of devolution in the decision
making aspect of the HR practices (where devolution occurred) because the HR
function retained the power to approve /dis-approve based on the budgetary
constraints.
tainted their image in the eyes of the employees by blaming them for all the
outcomes viewed unfavourably by the employees. Some HR managers interviewed
added that line managers shirked their responsibility to objectively communicate the
outcomes of employee appraisal and blamed the poor employee rating on the
guidelines formulated by the HR function. Examples from various banks that relate
to different HR practices are elaborated below.
For example, in CLASSIC BANK line managers cited the practice of compensation
and benefits as an example and stated that while they needed more participation in
the decision making related to determining the compensation package to recruit and
retain employees in a sector with high employability and high employee turnover,
HR managers were reluctant to do so. The general reason stated by the HR function
was maintaining internal equity. As a consequence they were not willing to share in
the implementation role. In the case of performance bonuses, controversies across
the case-study banks emerged between line and HR managers with the latter
believing that generally line managers deliberately recommended inflated bonuses to
203
maintain a better relationship with their employees. This perception was generally
more evident in VINTAGE BANK, TRADITIONAL BANK, WESTERN BANK,
ANGLO BANK and TRANSCO BANK where the HR managers were mostly
dominant in the decision making aspect and line managers had little role in deciding
the amount of increments / bonuses. The HR managers in these five case-study
banks added that they had to revise the increments / bonuses downwards which
resulted in the HR functions poor image in the eyes of the employees. Further, the
HR managers interviewed added that line managers misinformed employees of the
actual amount to avoid any confrontation with them later, which blemished the
image of the HR function in the eyes of the employees. This was because the
employees felt that their bonus had been revised downwards by the HR function that
had no idea of their effort and performance. Conversely, line managers interviewed
stated that they had a better evaluation of the employees performance and felt it was
unjustified to forcefully rate (bell curve) employees in varying performance
categories just to manage the budgetary constraints. To them, they had to work with
the employees which made it difficult for them to justify varying rewards. Thus it
appeared that their disdain for HR work stemmed from the lack of their involvement
in the decision making aspect.
interviewed stated that the HR function provided accurate information on the exact
positions where hiring was required while line managers felt that it just created
unnecessary delay in the response time. However, line managers interviewed in this
bank believed that it was important for them to identify the right employee who had
the required expertise and could blend in with the rest of team but HR managers
restricted their participation in the process. They claimed that when they had no
ownership in the decisions they did not want to implement them either and that it
was unreasonable of the HR function to expect them to perform in this capacity.
Hence in this case as well, it appears that the disdain of line managers for HR work
partially stemmed from their perception that the HR function did not want to transfer
any decision making authority.
204
and reflects the views shared by most line managers interviewed in the other casestudy banks as well.
Quite frankly, at the end of the day my performance will be judged on the basis of
achievement of the business objectives so that is my main concern and priority. I
would rather focus in this area than waste a lot of my time implementing others
work. (CLASLM4)
Further, in these two banks another issue was their large size because of which line
managers interviewed had a wide span of control and felt that in such a scenario
additional HR responsibilities were unmanageable for them to perform. In addition,
the line managers in these two banks stated that they were not evaluated on this
aspect of their job and thus any contribution in this area would go unrecognized. In
the domestic banks investigated barring TRADITIONAL BANK (private bank), the
line managers interviewed generally viewed the devolution of HR practices with
scepticism and felt that the senior and HR managers were actually trying to reduce
costs by making them perform additional work.
Evidence examined indicates that in the three small sized foreign banks WESTERN
BANK, ANGLO BANK and TRANSCO BANK where the decision making aspect
was devolved to line managers (low degree of devolution) there was a reluctance to
share in the implementation aspect. Some line managers interviewed appeared to
agree with the idea of involvement in people management issues to an extent but
struggled with finding time to perform the additional role. Further, they generally
appeared over burdened to meet the contrasting expectations of the senior
management and the HR function for the need to meet their targets versus the
requirement of effective people management. The comment of one line manager is
illustrative of this challenge and is applicable to other case-study banks as well.
I would really like to get to know my people better, but you see honestly I do not
know how to find time for that, it seems impossible. (TRANSLM1)
interviewed in these banks was the fact that superior employee management was
206
was considered a low profile work that was expected to be the operational work for
which HR people were hired.
reasons. The HR managers added that despite their willingness, need and desire to
devolve the implementation of certain HR practices / activities to line managers, they
sometimes felt that in the current state (weak people management skill-set)
devolution could create additional employee management issues, exacerbating the
challenges faced by them.
Line managers interviewed across the case-study banks expressed two distinct
opinions on the matter of people management skills.
predominantly expressed by the line managers in the domestic banks and largely in
VINTAGE BANK, CLASSIC BANK and TRADITIONAL BANK.
The line
managers propagated that no serious effort was made on the part of the HR function
to train them in HR specific areas because they were unable to recall when they had
last received a formal training in areas such as interpersonal skills and employee
motivation. This they stated made it difficult for them to dispense HR work even if
they wanted to. Also, they reported that HR managers instead of training and
demonstrating how to administer practices and policies like performance appraisal
and selection interviews kept modifying these on a regular basis which made it
difficult for them to acquire skills in the area and to maintain consistency in
implementation. The line managers interviewed in CLASSIC BANK and MODERN
BANK stated that in instances where training courses were held for line managers
they lacked insight, depth and.
managers did not show much interest in enhancing their people management skills
through training and at times even failed to acknowledge the requirement for
acquiring these skills. The comment of an HR manager in one such bank highlights
this concern. Similar comments by other HR managers in the domestic case-study
banks also emerged from our data.
We periodically arrange training sessions for line managers to upgrade their HR
skills. Line managers express their concern on the lack of opportunities for such
training on the one hand and agree to the benefits of receiving such training on the
other, but they routinely delay or reschedule on one pretext or another when training
sessions are arranged. (VINHR3)
The second opinion which was more widely cited by line managers in the foreign
case-study banks, barring GLOBAL BANK, where they were involved in dispensing
208
domestic case-study banks where the line managers historically dominated the
decision making aspect in most HR practices and appeared unconvinced and
unwilling to share in the implementation aspect, a majority of the concerns were
raised by HR managers. They pertained to the dictation of hasty decisions by line
managers and the varying degree of significance accorded to the adherence with
policy guidelines between the two stakeholders. Additionally, of concern for line
managers were the issues of inflexibility of the HR function in policy matters and the
intent of the HR function to devolve in certain HR practices. In the foreign casestudy banks examined, the concerns were mostly highlighted by line managers and
were related to policy formulation and implementation. They largely pertained to
the lack of the HR function to make decisions in context of their implications for the
business concerns. Common issues emerging from the data of all the case-study
banks included the emphasis of the HR function to conform to policy guidelines and
the lack of business focus of the HR function to design policies that best addressed
business concerns. Thus in the following paragraphs we associate the concerns with
209
particular banks where they appeared more dominant and were expressed more
frequently in the interviews of the HR and line managers. However, this does not
necessarily highlight that the issues were not applicable to the other case-study banks
but rather indicates that they were cited less frequently and were thus less significant.
In
addition they stated that it appeared that line managers were interested in getting
their demands and requirements approved as urgently as possible and did not want to
follow procedural requirements. HR managers interviewed in VINTAGE BANK
and TRADITIONAL BANK stated that there were instances when line managers
raised a requirement for urgent hiring or for quick promotion decisions ignoring the
procedural and legal needs.
applicability and adaptability in the context of Pakistan. This was not the case in the
four foreign case-study banks possibly due to the influence of their global cultural
norms and conformity with global HR practices. The comment of one line manager
illustrates this challenge.
I wish they [HR function] are more considerate towards our [line managers]
problems and issues when they formulate HR policies and practices.
Instead of
In the two case-study banks (MODERN BANK and GLOBAL BANK) where the
line managers shared the decision making aspect in certain HR practices with the HR
function there was great emphasis on the fact that the HR employees lacked business
acumen which presented a challenge in the formulation of strategic policies. We
contend that this not only impeded the efforts to devolve the decision making aspects
related to certain HR practices in to HR managers but also contributed towards the
low extent of strategic input by the HR function. Further, line managers opined that
the greater interest of HR managers to follow policies conflicted with their (line
managers) approach of finding a means to quickly resolve impending issues which
created operational inefficiencies.
Line managers
213
people from the localised regions to establish ourselves. Those who talk like them
and think like them. (GLOLM2)
However, regardless of the issues elaborated above which confront the HR-line
relationship, evidence extracted from the interviews of HR and line managers also
suggests that improvement in this relationship appears to have occurred to some
extent in the case-study banks. The improved coordination and communication
between line managers and HR managers is an example, especially in the banks
where the position of HR Relationship Managers was created. For example, the
Group Head ABC division at MODERN BANK was satisfied with the present
arrangement where a senior HR person had been solely dedicated for his Group and
said,
I believe that this additional post has resulted in marked improvement in the coordination between the HR department and line managers in at least the ABC
division I work in. (MODSM1)
The Relationship Manager of the ABC division also stated that he had been
instrumental in the resolution of a long standing issue concerning the up-grading of
certain employees in ABC which had suffered inordinate delay because of the lack
of a proper response by that division. A line manager from MODERN BANK agreed
with this view and commented,
Yes coordination has improved a lot in the last few years and I am impressed with
the close relationship developed by the Relationship Manager in our division. He
seems to speak and understand our language and has developed some business sense
as well. Overall, he has a supportive and rational approach to his work but just like
other HR people, he needs to be a little more flexible in his reliance of policy
manuals. (MODLM1)
Summary
In summary, an evaluation of the aforementioned challenges in the HR-line
relationship suggests that the HR and line managers had a rather contested
understanding of what devolution entailed.
implementation aspect of the HR practices as well but line managers expected that
devolution in the decision making part was the only aspect in which their
contribution mattered. The remaining work they felt was more time consuming and
214
less significant than the achievement of their business objectives and was the
responsibility of the HR managers to perform. The mind-set of line managers, their
disdain for HR work and their competing priorities, the absence of associated
rewards and the lack of time presented a challenge in the devolution of the HR
practices to them. However, the fear of loss of status and redundancy of the HR
function, the lack of business understanding and skills of HR managers and their
greater emphasis on following established guidelines and procedures regardless of
the situation / circumstances created issues in their relationship with line managers
which again, impeded the process of devolution in the case-study banks.
6.3. Conclusion
In conclusion, our analysis in the eight case-study banks examined revealed that a
low degree of devolution of HR activities to line managers had occurred in seven
case-study banks, with the exception of GLOBAL BANK where devolution
appeared to have occurred to a relatively greater extent. Thus, the insignificant
extent of devolution in most banks examined could not create time for the HR
managers to spend on the strategic level initiatives, especially in the seven casestudy banks with low level of devolution; as a consequence, the HR function
appeared unable to dispense a greater strategic role. Our analysis also revealed that
while HR managers generally wanted to devolve the aspect of implementation in
which the line managers were not interested, the line managers were willing to share
215
Hence, the
On a relative scale, across the case-study banks, less devolution appeared to have
occurred in the practices of compensation and benefits, training and development
216
Moreover, certain key challenges were reported that appeared to impede the
devolution of HR practices to line managers. One of them was the contrasting
perspective of the stakeholders mentioned earlier in the conclusion and others
included the disdain of line managers for HR work, their workload and priority to
achieve business goals, the lack of their people management skills and the absence of
associated rewards. In the case of senior managers the challenges included the lack
of discretion provided by them to the HR function and in the case of HR function the
challenges took the form of lack of business acumen of the HR employees and the
fear of loss and redundancy, mostly in the domestic cases-study banks. Nevertheless
some areas where improvement had occurred in the HR-line relationship emerged
from our analysis.
between the HR and line managers, especially in the banks where positions of
relationship managers were created.
While it
dominance of the line managers in these two banks were the less development of the
HR function in these banks and their low influencing power and profile (discussed in
chapter 5) which inhibited the involvement of the function in strategic activities.
This was despite the fact that line managers were performing some of the HR
functions activities. However availability of time continued to remain an issue
because line managers were only making decisions and not sharing in the
implementation. We suggest that no actual devolution took place because devolution
is defined (beginning of this chapter) as the degree to which the HR function
involves or transfers HR responsibilities to line managers but in this case there was
no evidence of a transfer, rather the line managers had ownership of this process all
along.
Thus we conclude that devolution did not take place to a significant extent in at least
seven case-study banks examined, barring GLOBAL BANK. The extent of
devolution in the implementation aspect appeared to be far less than that in the
decision making aspect and where devolution occurred in the decision making
aspect, it was of a low degree because financial (budgetary) and legal decisions were
retained by the HR function.
218
The evidence from the eight case-study banks indicates that development in the
structure of the HR function was mostly driven by the HR functions intention and
aspiration to dispense a more strategic role and to meet the demands of line
managers for better service delivery. This intent is highlighted by Torrington et al.
(2008) and Truss (2009) who suggest that to contribute to business success, the HR
function needs to perform as a strategic player and (Cleland et al., 2000) who state
that the business strategist will be a key role for HR specialists in the future. Hence,
our examination of data in this chapter will focus on whether and if the development
in the HR structure aided the HR function in achieving the intended strategic role
and how the skill-set of the HR employees facilitated or impeded the adoption of a
strategic role.
The rationale for exploring the structure of the HR function and the skill-set of HR
employees is underpinned in the conceptual link between these two elements and the
role of the HR function which emerged from a review of related literature in Chapter
2. According to Lawler III and Mohrman (2003), the structure of the HR function
can influence the strategic orientation of its role by enabling the HR managers to act
as strategic partners in addition to performing their administrative responsibilities
but to dispense a strategic role a developed HR skill-set is also vital. Additionally,
highlighting the link between the HR structure and skill-set, Ulrich and Brockbank
(2005) and Ramlall (2006) state that expertise in HR competencies and people
management skills alone are inadequate to enable strategic integration for which HR
219
managers must be equipped with business acumen as well. Thus, our attempt to
explore the elements of HR structure and HR skill-set is aligned with theoretical and
empirical studies in the field of HRM that suggest adoption of a framework which
includes a study of these elements to determine the role (strategic or operational)
being performed by the HR function.
This chapter is divided into six sections. The first section explores the drivers
underlying the changes in the structure of the HR function and examines the
structure of the HR function by identifying the presence or otherwise of the
Corporate HR team and the use of mechanisms like clustering and segmentation for
achieving specialisation. Section two examines the creation of the position of HR
Relationship Managers in the case-study banks and the role performed by them.
Section three examines the approach (centralisation, decentralisation and hybrid)
adopted by the case-study banks to organise the activities of the HR function and
section four highlights the implications of the HR staff to employee ratio in the
banks examined to highlight its influence (if any) on the structure adopted.
Additionally, section five explores the skill-set of HR employees and its influence on
the role adopted by the HR function in the case-study banks which is followed by the
conclusion to this chapter. The analysis presented in this chapter is based on data
gathered from the interviews of HR, senior and line managers and where necessary,
triangulation with bank documents.
220
CLASSIC BANK
BANK
MODERN BANK
GLOBAL BANK
BANK
Functional
Structure
TRADITIONAL
Functional
WESTERN
ANGLO BANK
BANK
Functional
Functional
3 legged stool
TRANSCO
BANK
Functional
Functional
Functional
model
Corporate HR
Yes
Yes
Yes
Yes
Yes
No
No
No
Specialisation
Limited set of
Segmentation of
A set of
Segmentation of
Centralised
A set of
A set of
A set of
specialist
specialist activities
specialist
specialist activities
Specialist and
specialist,
specialist,
specialist,
services
on regional basis
services
on regional basis
Shared Services.
generalist and
generalist and
generalist and
provided
and RMs
provided
and RMs
Decentralised
administrative
administrative
administrative
business partners
services located
services
services
centrally
located
located
centrally
centrally
and
Segmentation
Centralisation
centrally and
centrally and
RMs
RMs
Centralised
Hybrid
Centralised
Hybrid
Hybrid
Centralised
Centralised
Centralised
180
110
40
73
35
10
11
12
1:78
1:85
1:150
1:99
1:114
1:49
1:92
1:125
Decentralisation
HR Staff
HR:
Employee
Ratio
Source: Derived from interview data and triangulation with bank documents.
* Hybrid refers to a combination of centralisation and decentralisation.
221
The drivers discussed below emerged from the interviews of HR and line managers
interviewed across the case-study banks. They were specifically asked to identify
the major drivers which created the need for changing the structure of the HR
function in their respective banks. Initially, interviews were conducted with four to
five HR and line managers each, and the four most cited drivers for change were
extracted from these interviews. They included enhanced strategic contribution,
greater business focus, improved service delivery and cost reduction. Further, in
addition to the above mentioned interviews, the remaining HR and line managers
were also interviewed and were specifically asked to prioritize the drivers according
to their perspective. Tabulation of these responses revealed that across the eight
case-study banks examined, there appeared to be similarity between the perspectives
of HR and line managers related to the on the drivers for change but these
perspectives seemed to diverge when prioritizing the drivers.
Data analysed indicated that a majority of the HR managers (39 out of 40) across the
case-study banks ascribed top priority to the driver of enhancing strategic
contribution as the underlying reason for changing the structure of the HR function.
This was followed by the drivers of the intent / aspiration of the HR function to
become more business driven, improved delivery of HR services and in the case of
VINTAGE BANK, the driver of cost-cutting also emerged. Our analysis indicated
that the driver of enhancing strategic contribution was to some extent more a rhetoric
than reality because most structural changes as discussed in the following three
sections were predominantly undertaken, at least in the short-term, to meet the
demands of line managers related to better service delivery.
Also an analysis of the data in the following sections will highlight and discuss in
greater detail, the other reasons for structural changes which include the feasibility
(or otherwise) of relocating operations from one region to another, improving the
control of the HR operations and pooling of the best resources (skilled HR
employees). The tendency of HR managers for overstating the intent to enhance the
strategic contribution of the HR function as a driver for initiating and incorporating
structural changes in the HR function has also reported by Truss (2002). This study
highlights that the HR managers perceive that changes of various nature in the HR
222
function are driven by the intent to enhance its strategic contribution as suggested in
prescriptive literature.
Conversely, from the responses compiled and the interviews conducted with line
managers, it appeared that predominantly the key driver for structural reforms in the
HR function was the need to first address the issues / weaknesses in service delivery
which was of utmost importance for enhancing the efficiency and performance of the
bank. In their perspective, unless the business acumen and skill-set of the HR
employees was enhanced there was little possibility that the HR function could
contribute strategically. In the four domestic case-study banks, line managers cited
the creation of positions of Relationship Managers as an example. They highlighted
that this structural change had not resulted in considerable strategic input because at
this stage in the development of the HR function and the skill-set possessed, the
Relationship Managers could only facilitate better communication with the
Corporate HR team and improve the time and quality of services extended by the HR
function.
Roebuck (2008, p.40) that, the credibility of HR is based on the delivery of the core
transactional HR services to the business at a high-quality level. Only if this is in
place will the business accept delivery of strategic HR. Further, this perspective
conforms to the view of Lawler and Mohrman (2003) that structural reform alone is
not indicative and hence sufficient for repositioning of the HR function as a strategic
arm of the organisation.
7.1.2. Corporate HR
According to Ulrich et al., (2008) the Corporate HR consists of the top HR
management which is responsible for: shaping the programs that implement the
CEOs agenda, ensuring that all HR work is aligned to business goals, ensuring the
development of HR professionals and creating a consistent firm-wide culture. Our
analysis based on the empirical evidence indicated that a Corporate HR team existed
in five of the eight case-study banks (the four domestic banks and foreign bank
GLOBAL BANK). However, in the three small sized foreign case-study banks
(WESTERN BANK, ANGLO BANK and TRANSCO BANK), where the HR
function was smaller in size, the HR Head himself embodied the Corporate HR
function by advising on policy development and strategic initiatives. The explanation
223
According to the HR Heads interviewed in the two large domestic banks (VINTAGE
BANK and CLASSIC BANK), the Corporate HR team was expanded as a
consequence of major structural changes between 2004 and 2007 to enhance the
strategic input provided by the HR function. For example, in CLASSIC BANK the
Heads of two newly established departments of Organisational Development and
Strategy Planning were included in the team. The OD Head primarily advised on
major structural and policy changes at the bank that required a concentrated effort
towards change management and the Strategic Planning Head catered for integration
of the HR processes, practices and policies in the major initiatives taken at a bankwide level. According to the HR Head in VINTAGE BANK, the Corporate HR
team was the communication link between the headquarters and the branches and the
team was central in coordinating HR activities across a wide branch network that
covered the entire country. In both these banks, the respective HR Head interviewed
identified the large size of the bank as a reason for which the Corporate HR team
was inducted. The large size and branch network meant that control needed to be
exercised to achieve consistency in the implementation of the HR practices. Another
reason cited was the significant variation of the HR personnel in terms of their skillset which necessitated the establishment of a core (Corporate HR) team that would
provide the vision and guidance for the less experienced and under-skilled HR
employees to perform their work.
pay system, the introduction of a new performance management system, the volume
analysis exercise, the induction of new banking operations software and the
forthcoming Human Resource Information Systems. However, he cited that the
primary purpose (enhancement of strategic role) behind the creation of the Corporate
HR team was considerably defeated because of the inadequate skill-set of the junior
employees in the HR function. This meant that he had to provide a lot of guidance to
them and his role was therefore equally significant in the implementation aspect,
which was quite time consuming.
Moreover, unlike the five case-study banks discussed above, there was no presence
of a Corporate HR team in the remaining three banks examined; the HR Head was
responsible for providing policy and strategic input to the senior management. The
following comment from the HR Head at WESTERN BANK highlights the absence
of a Corporate HR team and highlights the implications for the role and
responsibilities of the HR Head. Similar comments were given by the HR Heads at
TRANSCO BANK and ANGLO BANK as well.
Due to the absence of a Corporate HR team I am stretched to the limit; this
is one aspect of my job which is really dissatisfying. I have to spend so much
time every week on coordinating between the hierarchical levels and
branches which leaves very little time for me to proactively think about
strategic interventions and to constructively participate at policy development
forums. (WESTHR1)
225
Most examples from the data seem to indicate the use of the clustering technique for
achieving specialisation. The term clustering is used in the literature to define the
grouping together of multiple HR practices in a bundle (Fabi et al., 2007; MacDuffie,
1995; Pfeffer, 1994). Our use of the term clustering in the HR structure is an
adaptation from this terminology; we define clustering as a technique employed by
the case-study banks to group together various HR practices under one cluster head.
Our analysis based on the interviews of HR managers indicated that in seven of the
eight case-study banks which included all four domestic banks and three foreign
banks (WESTERN BANK, ANGLO BANK and TRANSCO BANK) efforts were
made to create specialist teams. Five of these seven case-study banks adopted the
clustering technique for this purpose (see table 7.2) and two (CLASSIC BANK and
MODERN BANK) adopted the segmentation technique for specialisation. The only
case-study bank that had a dual focus and provided specialist support through the
Centre of Expertise and generalist support through the business partners was
GLOBAL BANK (see table 7.1). It is pertinent to highlight that the distinction
between the Centre of Expertise at GLOBAL BANK and the specialist clusters in the
remaining seven case-study banks lies in the fact that the specialised clusters are
responsible for the implementation aspect of the HR activities as well, which is the
responsibility of the Centre for Shared Services in GLOBAL BANK.
From amongst the domestic case-study banks, VINTAGE BANK (privatized, large
sized bank) appeared to have a limited focus on specialisation with specialist teams
only in two core HR areas of compensation and benefits and resourcing. According
226
In the other large case-study bank (CLASSIC BANK) which was privatized almost
15 years ago and the two private medium-sized domestic banks TRADITIONAL
BANK and MODERN BANK, a relatively higher degree of specialisation existed.
The senior managers and HR Heads interviewed in these three banks generally
agreed that there was a need to structure the HR function into specialist teams to
develop a higher level of expertise in specific HR areas. This in their view was
necessary to provide better quality and effective and efficient service delivery. In
these banks, the specialist teams consisted of managers who were responsible for
specific areas and the team size varied from two to eight managers, depending on the
nature and the number of tasks they were assigned to perform. In addition, the HR
managers of both TRADITIONAL BANK and MODERN BANK stated that it was
the expansion in the workforce of the banks which led to an increase in the number
of HR employees that made it possible for the HR function to opt for specialisation.
For example, the HR Head interviewed stated that previously there were 15 HR
employees in TRADITIONAL BANK who were generalists and performed different
HR tasks but after their number increased to 40, the possibility of developing
specialised teams emerged on which the bank capitalised.
The HR managers interviewed in the three small sized foreign banks (WESTERN
BANK, ANGLO BANK and TRANSCO BANK) which operate in niche markets
227
(high-end customers and big corporate clients), stated that boutique banking 18
necessitated the presence of specialists who possessed expertise and competence in
specific HR areas to cater to the needs of high-end customers. However, evidence
examined highlighted that the degree of specialisation varied between the three
foreign case-study banks due to the number of HR personnel in the HR function.
For example, the HR function in TRANSCO BANK is staffed by 12 employees,
inclusive of the HR Country Head. Three HR managers report directly to the HR
Head of which two managers are responsible for one specific HR activity each
(compensation and benefits and training respectively) while the remaining activities
are clustered under the third manager who is responsible for performance
management, employee relations and HR compliance and HR administration (see
table 7.2). Previously, in 2004, the department was structured on the basis of lean
reporting with five HR personnel (each responsible for one specific area) training
and development, recruitment and selection, compensation and benefits, employee
support and employee relations and all five directly reported to the HR Head.
As stated above, in comparison with the three small foreign case-study banks and all
four domestic case-study banks, GLOBAL BANK followed a different structure that
was quite similar to the Three Legged Stool Model prescribed by Ulrich. According
to the HR managers interviewed in this bank, the structure of the HR function was
characterized by a Centre for Service Delivery, a Centre of Excellence and business
partners. The Centre of Excellence provided the specialised services to the line
managers while the Centre for Service Delivery managed the administrative aspects
of implementation. Further they added that the bank had a dual focus - business
partners were functioning as generalists while the specialist focus was evident in the
centre of excellence19. The aim of the business partners who were the front end of
HR was to provide strategic input to the business units while the centre for service
delivery provided cost effective administrative support.
According to an HR
manager interviewed at GLOBAL BANK, the bank operations made the adoption of
the three legged structure viable. The comment below reflects this view.
18
terminology bankers use in Pakistan to define their operations and activities focused at high-end
customers
19
Where expertise in specific areas of resourcing and rewards, employee relations and learning and
talent development are provided.
228
Activities
VINTAGE
TRADITIONAL
WESTERN
BANK
BANK
BANK
ANGLO BANK
TRANSCO
BANK
RM Retail and
In-charge
HR Business
Manager
Consumer
strategic
Partner
and
~HR
planning & OD
~Performance
~Recruitment
~Performance
~Organisation
Management
~Performance
Management
Development
~Recruitment
Management
~Employee
procedures
~Performance
and Selection
Manager Rewards
Relations
~Resourcing
Management
HR Rewards
and HR Operations
~HR Compliance
~Compensation
Systems
and
~Compensation
~ HR
and Benefits
~Strategic
Operations
Planning
~ Rewards
Administration
~HR
Manager Employee
administration
Relations
strategic
planning,
policies
and
HR
Development
~Engagement
~Resourcing
~Employee
Relations
Source: Derived from interview data.
229
Talent
HR
Recruitment and
Talent Head
Administration
to
the
In-charge
strategic
planning
and
OD
interviewed
at
The HR Head at
VINTAGE BANK in her interview also pointed to the fact that while the bank had
been in operations for more than five decades (at the time of interviews), a
significant number of the employees in the HR function did not possess professional
degrees with a specialisation in HR. Moreover, many of them had been transferred
from various other departments at the time of restructuring of the bank and thus had
little experience in the HR function.
Organisation Development, in the new structure, she was also responsible for
recruitment and performance management while the Manager Rewards and HR
Operations was managing compensation and benefits and HR administrative
activities such as payroll, taxes, employee loans and medical insurance. She added
that the third manager with multiple responsibilities, Manager Employee Relations
was responsible for the HR practices of employee engagement, resourcing and
employee relations. The remaining two HR managers provided services in the areas
of Group HR systems and learning and development.
Additionally, the HR Head highlighted that below the five HR managers who
directly reported to him, were five HR employees (junior HR managers) who
assisted the HR managers in their work.
Development stated that the younger employees in the HR function were generally
231
performing purely administrative work but since they were inexperienced, he and the
other HR managers were responsible to monitor them. This meant that a lot of their
time was spent on either advising on administrative work, or in certain cases,
performing it as well.
Moreover, the interview with the HR Head at TRANSCO BANK revealed that the
total strength of HR employees was 12. He indicated that three HR managers
directly reported to him, of whom one was responsible for multiple activities and the
other two were managing one specific activity each. The specific activities were
compensation and rewards and training and development while the multiple
activities were nested under the Recruitment and Talent Head who was responsible
for three core HR activities - performance management, employee relations and HR
compliance and administration. Four employees reported to the Recruitment and
Talent Head while the remaining four aided the other two HR managers in their
work. According to the Recruitment and Talent Head, the employees reporting to
him were mostly performing administrative work and he was responsible for
managing their activities as well. This in his view impeded his primary objective of
providing better standards in service delivery.
Thus, despite the intention of the HR function to establish specialist teams that
would provide more specialist input to the line managers, our analysis from the
interviews with various HR managers in the case-study banks revealed that this did
not happen to a significant extent. We suggest that this is because of the underlying
reasons which necessitated the creation of the specialist teams.
These reasons
In the case of nature of work, some employees who were reporting to certain cluster
heads performed administrative work only and they were monitored by the cluster
heads. This divided their attention and as a result, less time was left for providing
service delivery to line managers. In the case of dearth of skilled HR employees, the
HR employees placed in the clusters were unable to develop into specialists who
could align with line managers to provide better service delivery. As a consequence
line managers continued to directly communicate with the specialist HR personnel in
the Corporate HR team to resolve issues in service delivery.
Resultantly, the
Corporate HR team appeared to be largely unable to achieve the aim of gaining more
time for investing in strategic level issues which was stated to be the intent behind
creating the specialist clusters.
The other technique used for specialisation, emerging from our analysis of the casestudy banks was segmentation. Segmentation refers to assigning the delivery of HR
services to different divisions or segments within the HR function. According to
Som (2012), the concept includes decentralisation of formal structures, reducing
hierarchy in organisations, delegation, and specialization. An analysis of data
revealed that this practice prevailed in two banks CLASSIC BANK and MODERN
BANK where segmentation of core HR practices was undertaken on a regional basis.
According to an HR manager interviewed in CLASSIC BANK and triangulation
with bank documents, the HR Head and most other divisions such as Organisational
Development and Recruitment, Financial Services and HR Strategy were located in
the central region whereas compensation and benefits and training and development
were based in the southern region. Similarly, according to the HR Head interviewed
in MODERN BANK, major HR services were divided on a regional basis; the HR
Head with the additional portfolio of Head Quality Assurance was in-charge of the
HR Relationship Management, employee communications and Batch and
Managerial Recruitment practices (recently introduced) and he was located in the
north region. On a similar pattern, the General Manager South was responsible for
employee benefits and performance management centrally, and for recruitment and
selection, HR operations, MIS and disciplinary action for the south region only.
233
As in the case of the clustering technique above, our analysis in the case of
segmentation also suggests that the core HR activities were segmented on a regional
basis for some underlying reasons which were not necessarily aligned with the stated
intent of the Corporate HR team to enhance the HR functions capacity to provide
specialist support or advice to line managers. The responses from the interviews of
HR and senior managers in these two banks indicated that segmentation was
undertaken to enable in the quick delivery of services in the large sized bank
(CLASSIC BANK) and in MODERN BANK which was expanding its branch
network, segmentation aimed at increasing operational efficiency with an embedded
reason monitoring of service delivery.
Summary
In summary, it appeared that the Corporate HR team was introduced with the intent
to enhance the strategic contribution of the HR function through the involvement of
senior HR managers, in policy formulation and execution. This was evident in some
case-study banks through the establishment of a Corporate HR team and in others
through the expansion of the team.
adopt a structure which would help maintain control and standards in the delivery of
HR services in the large sized banks VINTAGE BANK and CLASSIC BANK,
where the sheer size of operations necessitated the inclusion of a Corporate HR
layer. Also, to ensure consistency in the services provided, there appeared a need to
establish the Corporate HR team in these two as well as TRADITIONAL BANK and
MODERN BANK. In this case, the Corporate HR teams were tasked to provide
direction and guidance to the HR employees who were either fresh hired or less
skilled in HR work.
234
Further, evidence examined indicated that while the Corporate HR team appeared to
provide a platform for strategic contribution, it did not seem to significantly
influence the HR function in a manner for it to adopt a strategic role, primarily due
to the limited input of the Corporate HR team in the strategy formulation aspect.
This was a result of the underlying reasons highlighted in the preceding paragraph,
for establishing the team. GLOBAL BANK was an exception because of the three
legged structure where business partners performed in a strategic role.
Further, our analysis highlighted the adoption of the clustering and segmentation
techniques for attaining specialisation in the HR function with the intent to improve
the quality of service delivery and to enhance the input of area experts in the policy
matters related to their area of expertise. The technique of clustering was adopted in
five case-study banks, segmentation was adopted in two case-study banks and in one
bank (GLOBAL BANK) the three legged stool model with a Centre of Expertise was
adopted. Specialisation in the five case-study banks was different from the activities
performed by the Centre of Expertise in GLOBAL BANK in that the specialist
clusters were responsible for the implementation aspect of the HR practice as well
due to the absence of a separate Centre for Shared Services. Additionally we found
that the degree of specialisation attained varied between the case-study banks
according to the number of employees available and was greatly affected by the
involvement of specialists in monitoring and guiding the young and inexperienced
and the experienced but low skilled employees in the HR function.
As a
consequence specialisation was largely unable to create time for the specialists to
involve themselves in strategic work and in fact line managers even approached
members of the Corporate HR team for issues they were facing in service delivery
which impeded the teams efforts to provide greater strategic input.
professionals as embedded HR and state that they go by many other titles like
relationship managers, HR business partners, or HR generalists.
Interviews with HR managers in the eight case-study banks revealed that only
GLOBAL BANK had positions of both Relationship Managers and business
partners. In the remaining banks (all four domestic banks), only the position of
Relationship Managers who were aligned by region, business unit or both, was
introduced (see table 7.3). While the intent was to develop them as future business
partners, as discussed below, it appeared that the Relationship Managers had yet to
perform activities similar to those of business partners, as prescribed in literature. In
the case of the three small-sized banks WESTERN BANK, ANGLO BANK and
TRANSCO BANK, there are no Relationship Managers because the HR Heads
themselves partnered with line managers owing to the small size of the HR function
which mostly consisted of professionally qualified but inexperienced young
employees.
236
Aligned
VINTAGE
CLASSIC
TRADITIONAL
MODERN
GLOBAL
BANK
BANK
BANK
BANK
BANK
by
Region
Aligned
by
Business
Aligned
by
Business
and
Region
Source: Derived from interview data.
Managers in the case-study banks indicated that where they were aligned by regions
(North, South and Central), there was a dual reporting relationship with the HR and
Regional Business Head.
The only case-study bank in our sample where the Relationship Manager was
aligned by business group was TRADITIONAL BANK. In this case, the position of
the Group Head ABC division was identified as that of a Relationship Manager. The
workforce in this business group was the highest compared to the other business
groups in the bank and the Relationship Manager interviewed stated that he was
responsible for better coordination and communication between the HR function and
the business group and he was also to provide a quicker resolution to issues of
employees in this unit. According to him, he neither provided strategic input to the
business unit nor had the authority for decision making; he was primarily responsible
for enhancing the operational efficiency of the business group with little, if any, role
in the strategic policies or matters of the unit. The comment of this Relationship
237
Manager below highlights his role, which largely appears to be in the capacity of
providing operational support.
Prior to my appointment in this capacity there was a long standing issue in the ABC
division of upgrading some employees. The business unit was communicating with
multiple employees in the HR function [some of whom were not relevant to the
issue] which caused inordinate delay in the work. However, once I was attached
with the unit, the problem was resolved with considerable ease and speed.
(TRADHR2)
In both these banks, the Relationship Managers aligned by region had a dual
reporting relationship with the HR Head and the Regional / Area Head while those
aligned by business groups reported to the relevant Group / Business Head in
addition to the HR Head. Thus, the analysis above indicates that predominantly the
RMs were positioned on regional basis which suggests that the main purpose for
establishing these positions was to improve the operational efficiency of the HR
function by providing speedy delivery of HR services. Further, the data examined
provides evidence that very few RMs were attached with the business units and in
one case-study bank (MODERN BANK), the only RM aligned with business units
was responsible for four key business units which may have limited the strategic
input he could provide. Based on this analysis, we suggest that the strategic input by
the HR function did not improve to a significant extent in both the case-study banks.
238
Additionally the HR Head at MODERN BANK also expressed his apprehension that
the Relationship Manager who was attached to a business unit appeared to give
greater priority to the perspective of the business unit rather than to the issues faced
by the HR function in meeting the requirements of the business unit. His comment
below highlights this concern.
We spend a lot of time chasing our Relationship Manager.
He has stopped
updating himself on changes taking place at corporate HR. The HR people feel that
whenever there is a discussion between the business unit heads and corporate HR on
issues regarding resources and compliance we do not get support from our
Relationship Manager. (MODHR1)
Moreover, evidence provided from data the examined revealed that in two case-study
banks, CLASSIC BANK and GLOBAL BANK, the Relationship Managers were
aligned on regional basis.
performed in both the banks. Interviews of line managers and the HR Head in
CLASSIC BANK revealed that similar to the three banks discussed above, the
Relationship Managers were primarily facilitating the routine operational work in the
branches (within the areas) assigned and the strategic input (to whatever extent) was
provided by the Corporate HR team. The comment of an HR manager at CLASSIC
BANK who was a member of the Corporate HR team illustrates this position.
Presently our Relationship Managers are only involved in operational work but we
are planning to equip them with the skills through which they can contribute in
strategic terms as well. So far all the strategic input is provided by the Corporate
HR team. (CLASHR2)
Further, an examination of the data obtained from GLOBAL BANK revealed that
this was the only bank where it appeared that the Relationship Managers were being
developed as future business partners. This is because the HR Head interviewed
stated that the Relationship Managers were getting sort of an on-the-job training to
equip them with the skills and business acumen necessary for performing in a
strategic capacity. Also, the line managers interviewed stated that they had regular
and close interaction with the Relationship Managers for the provision of operational
support in the delivery of HR services. Significant in this context is the fact that the
greater involvement and close interaction of RMs with the line managers in
239
interviews highlighted that the business partner was responsible for aligning the HR
strategy adopted by his particular division, with the evolving business strategy and
requirements of the division. In doing so, he was responsible for commissioning the
services of the Centre of Expertise and the Centre of Shared Services. The senior
managers interviewed stated that the business partners were providing them strategic
input but they needed to develop their business acumen further, to provide more
valuable input. In their view, the business partner was not just the strategic arm of
the HR function but was also the most critical link with the HR function and they
assessed the functions performance based on that of the business partner. The
following comment of an HR business partner at GLOBAL BANK highlights his
role at the bank and provides an insight into the working relationship with the
associated business division.
I am not just responsible for commissioning the services of the HR function, for the
division but I have a broader role which includes involvement in strategy matters,
providing related HR strategies and managing the talent needs of the division. In
Pakistan, or at least the banking sector, the business partner is a fairly new concept
so I cant say that we have reached the optimal level or are at a very developed stage
in this role, but we have surely made a difference by contributing the customized
HR strategies for our related business divisions. (GLOHR3)
240
In addition, our analysis based on data collected revealed that the structure of the HR
function at GLOBAL BANK was quite similar to the widely cited three legged
model prescribed by Ulrich (1997), to that discussed in theoretical literature like
Reilly and Williams (2006) and to that proposed in practitioner literature like CIPD
(2007). The line managers interviewed in GLOBAL BANK appeared to appreciate
the quality, standard and speed of delivery of HR services which were dispensed
through the Centre for Shared Services. However, at the same time, they seemed
apprehensive of the inadequate business skills of the business partners and stated that
after the new HR structure was implemented, there were added costs and
coordination issues, especially between the Centres of Service Delivery and
Expertise. This they stated created issues for them and delayed their work.
Similar apprehensions were shared by the HR Heads of the other seven case-study
banks interviewed when they were asked for their opinion on whether they wanted to
adopt / adapt the three legged model. While they mostly agreed that the adoption of
such a model would enhance the profile of the HR function and could provide them a
greater role in the strategic matters, they expressed reluctance in implementing the
structure in its entirety due to the following issues. In the three small-sized banks
WESTERN BANK, ANGLO BANK and TRANSCO BANK, the HR Head
interviewed stated that the small scale of operations of the bank made the three
legged structure of the HR function infeasible due to the high initial costs of
implementing it.
The HR Heads interviewed in four domestic case-study banks expressed that they
were not in a position to implement the tripod structure in its entirety, but they had
developed one segment similar to the Centre of Expertise. This facilitated the
development of specialists who were responsible for designing and implementing
specialist HR practices like compensation and benefits and performance
management for instance. Further, there was an inclination to develop business
partners for which the induction of the Relationship Managers was cited as an
example. However, the line managers interviewed in these banks stated that there
was a significant gap in the existing and the required skill-set of the Relationship
Managers if they were to perform in the capacity of business partners. The HR
managers interviewed in the four case-study banks appeared to acknowledge the
241
importance and utility of a Centre for Shared Services, especially in the large sized
banks VINTAGE BANK and CLASSIC BANK, but they highlighted that the
inadequate IT infrastructure was one of the major hurdles in the way. HR Heads in
two domestic banks (CLASSIC BANK, MODERN BANK) also added that even if
the requisite resources were available they would prefer to tailor the model keeping
into consideration the environment of Pakistan. A specific example cited by an HR
manager at CLASSIC BANK related to the need for customisation of the shared
services segment illustrates the reason for this.
In our culture people prefer and feel more comfortable if they can see the person
they are talking to; if they can identify a face with the name. Even though we [HR]
have increased our presence with RMs in different regions, the employees and line
managers still complain of remoteness and lack of personal touch. (CLASHR3)
Summary
To summarise, our analysis above highlighted that little strategic contribution was
made by the HR Relationship Managers in the case-study banks examined. An
exception was the Relationship Managers in GLOBAL BANK who were required to
closely coordinate with the line managers and to provide the input necessary for
managing the operations. Some of the reasons for the less strategic contribution by
RMS in the domestic banks were, firstly, the Relationship Managers were unable to
independently commission the services from the HR function on behalf of the
business unit, unlike the business partners. This is primarily because a dominant
majority of these Relationship Managers were aligned by region and not business
units, so they had little coordination with the business heads. Secondly, the line
managers interviewed in the case-study banks where Relationship Managers existed
(barring GLOBAL BANK) stated that the RMS lacked the required skill-set and
especially business acumen which was necessary to make informed decisions related
to business strategies. Thirdly, the job description of Relationship Managers and
their scope of work was limited to providing operational support which meant that
the role assigned to them did not envision any strategic contribution. Fourthly,
Relationship Managers had a direct reporting relationship with the business /
regional or area Head and only a dotted line relationship with the HR Head. This
appeared to influence their role because line managers utilized their services for
242
operational HR work where they needed help rather than to develop them as business
partners which was the underlying intent of the HR function.
Hence, holistically, the analysis conducted indicated that since the RMs were mostly
occupied with operational work they were unable to provide much strategic input in
the area or business they were associated with. As such, it appeared that in at least
seven of the eight case-study banks examined, this structural change was able to
improve the operational efficiency of the HR function but it was largely unable to
achieve the intent behind the change which was to enhance the strategic capacity of
the function.
Relationship Managers, it may not be very appropriate to compare their role with
that of the business partner.
According to Selden (2010), Ulrich et al., (2008), Drucker (1991) and Lorenz
(1993), in centralised or single function businesses, all HR activities are either
located at Corporate HR or if HR personnel are placed in different locations and
business units, the decision making is centralised at Corporate HR. This approach
towards structuring the operations addresses issues of control, consistency and lack
of experienced / skilled HR Staff (especially when few in number) but it can result in
distancing the HR function from customer needs because of strict adherence to rules
of control and efficiency. Conversely, in decentralisation some decision making is
devolved to HR employees / partners operating with business units or by location as
closer proximity with line managers can facilitate initiatives to improve customer
responsiveness, aid in quicker decision making and allow for maximum agility.
243
Triangulation of bank documents with interview data from HR managers in the casestudy banks highlighted that a hybrid approach (combination of both centralisation
and decentralisation) was adopted to enable at least three banks examined, to
integrate the competitive features of customer focus, flexibility and economies of
scale. A comparison across the case-study banks revealed that the HR function was
centralised in five banks while the remaining three adopted a hybrid approach of
centralisation with some decentralisation. Of the five centralised case-study banks,
three were small-sized banks (WESTERN BANK, ANGLO BANK and TRANSCO
BANK) while the two remaining were large or medium sized domestic banks
(VINTAGE BANK and TRADITIONAL BANK). The three remaining banks that
adopted a hybrid approach included one large bank, CLASSIC BANK and two
medium sized banks, MODERN BANK and GLOBAL BANK.
In the three small sized banks WESTERN BANK, ANGLO BANK, and TRANSCO
BANK, all support to the HR employees and line and senior management was
provided from the Corporate HR located at the respective Head Offices of these
case-study banks. According to the senior and HR managers interviewed in these
three banks, while decentralisation offered the advantages of quicker decisions /
solutions and development of competencies of middle managers, the small branch
network, small scale of operations and small size of the HR workforce rendered this
option infeasible. Further, they stated that decentralisation was not required (at the
time of interviews) as it would add more to the cost of delivery of HR services due to
the duplication of HR activities in multiple locations and had less to offer in terms of
benefits such as achieving economies of scale. Also they appeared to already be
benefitting from the quick decision making which decentralisation had to offer in the
existing centralised operations. This was due to the fact that the executive and senior
managers were located in close proximity with the HR function (at the Head Office)
which enabled frequent interaction with them and reduced the delay in decision
making that is characteristic of a centralised HR function.
244
Further, our analysis based on evidence from the interviews of HR managers in one
medium and one large sized domestic bank (TRADITIONAL BANK and VINTAGE
BANK) indicated that the HR activities were centralised primarily for the purpose of
achieving the benefits of control, consistency and better quality in service delivery.
More specifically, according to the HR Head interviewed at VINTAGE BANK, the
HR operations were centralised and all policy matters were decided at Corporate HR
in order to establish greater control across a wide branch network. For example, the
initiation and approval for senior level hiring was made by the resourcing unit
located at Corporate HR while for junior level positions preliminary processing was
conducted at the regional level by Relationship Manager HR but the final round of
interviews and approval was again managed centrally at the Resource unit. The
comment below of an HR manager at VINTAGE BANK provides credence to the
statement by the HR Head.
We are centralised at this stage because we feel that the IT infrastructure is pretty
weak and to control and ensure consistency in the implementation of HR practices,
especially in critical areas like recruitment and compensation. At present the HR
function wants to continue operating in this way and there are no other options
under consideration. (VINHR2)
Additionally, in the case of the medium sized case-study bank with centralised HR
operations, senior managers interviewed stated that all HR activities were previously
centralised to contain costs. However, with the growth in the sector, expansion in
the branch network of TRADITIONAL BANK and higher profitability of this bank,
the emphasis appeared to shift towards the provision of improved quality in service
delivery (reduced transaction time and quicker support to employees). We suggest
that this indicates that centralisation of HR operations in this bank was intended for
achieving greater consistency in the delivery of HR services. Further, according to
the HR Head interviewed at this bank, the scarcity of experienced and skilled HR
employees also presented a challenge which necessitated that the HR activities and
decision making be kept centralised for the time being.
Moreover, an analysis of the data collected revealed that the hybrid approach of
centralisation and decentralisation was evident in two domestic banks (CLASSIC
BANK and MODERN BANK) and one foreign bank (GLOBAL BANK). Based on
245
the interviews with the HR managers in both domestic case-study banks, it appeared
that the approach of centralisation of some HR activities was followed for two interlinked reasons that included the lack of an adequate skill-set of the HR employees
and an emphasis on improved quality in service delivery. HR managers interviewed
in both the banks believed that presently (at the time of interviews), most of the HR
employees had an inadequate skill-set to perform independently; some employees
had a relevant professional qualification but were fresh and inexperienced while
others were mostly had years of experience but had a non-HR background. Further,
the HR Heads added that since the banks were focusing on improved service
delivery which required expertise, consistency and quality, there was a need to
centralise those operations in which the inadequate skill-set of HR employees could
hinder this objective. However, both HR Heads expressed that decentralisation was
an option in these areas as well when the skill-set of the HR employees would
enhance.
In the case of
CLASSIC BANK, decentralisation was evident in two HR practices. The first was
the practice of training and development that was located in the South Region for the
purpose of proximity with the banks own training academies and other external
training institutions that were located there.
According to an HR manager
interviewed, the banks own training facilities were located in the South Region
where its Head Office was earlier located but with its privatization and change in
ownership, the Head Office was shifted to the North Region. However, relocation of
the training infrastructure and facilities was not considered feasible due to financial
and operational reasons.
The second example relates to the practice of compensation and benefits practice
which was also based in the South Region earlier. The reason shared by the HR
managers interviewed for decentralisation of this practice was that the Head Offices
246
of almost all banks in Pakistan were located in the south of the country so it was
easier for the bank to obtain accurate market information if the relevant HR manager
was located there as well. Another underlying reason stated by HR and senior
managers interviewed at CLASSIC BANK was the personal issues of the related HR
manager which made it difficult for him to relocate. The HR Head stated that he and
the management did not want to lose this employee because he offered a good blend
of market knowledge, international exposure to the best practices in compensation
and benefits and experience in designing compensation strategies for organisations in
developing countries that were operating in sectors that had undergone privatization.
Similar to CLASSIC BANK, in MODERN BANK as well, there was evidence that a
hybrid approach of centralisation and decentralisation was employed with some core
HR practices bifurcated between the north and south regions.
The practices /
In the third case-study bank (GLOBAL BANK), where a hybrid approach was
adopted, evidence examined indicated that the approach of centralisation was evident
in the establishment of the Centres of Shared Service and Expertise. Additionally,
the approach of decentralisation was evident in the creation of positions of business
partners who were attached with three units (Consumer Banking, Wholesale Banking
and Global Technical Operations). According the a business partner interviewed at
GLOBAL BANK, they had the authority to commission services from both the
247
centres on the request and need of the business units they were attached with and
they were also involved in the strategy development and decisions of these business
units.
occasional tendency of lack of ownership in certain matters which fall in the grey
area where there is no clear demarcation between shared services and specialist
centres.
Summary
To summarise, evidence presented in this section revealed that five case-study banks
adopted a centralisation approach to structuring their HR function while three casestudy banks adopted a hybrid approach which is characteristic of centralisation of
some HR practices / process and decentralisation of others. In the three small sized
banks (WESTERN BANK, ANGLO BANK and TRANSCO BANK) the approach
of centralisation of HR processes / practices appeared to have been undertaken
because of the small size of operations, branch network and HR workforce made it
infeasible both financially and administratively to decentralise operations. Further,
the benefit of quick decision in decentralisation was already present in these banks
even though they had centralised operations because of close proximity of the HR
function and the HR Head with the CEO, senior and line managers. In the large
(VINTAGE BANK) and medium (TRADITIONAL BANK) sized banks the
248
In
GLOBAL BANK, the three legged stool structure facilitated decentralisation through
the induction of business partners who were generalists and provided support to the
business units they were associated with.
Expertise and Shared Services for acquiring their services and participated in
strategy development and alignment of HR practices to suit the business strategy.
Centralisation in this case was evident in the Centres of Shared Services and
Expertise that provided consistency and standardization in the HR practices and
procedures that were implemented across the business units. However, the line
managers interviewed highlighted issues of gaps in service delivery due to
communication issues between the Centre of Shared Services and the Centre of
Expertise and the emergence of distance between the HR function and the employees
due to lack of accessibility of the specialists in these centres.
Our analysis based on the data provided by the case-study banks revealed that a
variation of between 1:78 at the lower end and 1:125 at the upper end existed in six
case-study banks (see table 7.1). The ratio of 1:78 for instance, indicates that one
HR employee was responsible for 78 employees in the bank. The two exceptions
which emerged from our data were TRADITIONAL BANK with a ratio of 1:150
and WESTERN BANK with a ratio is 1:49.
250
We still feel that even with the increase, the present strength of the HR function [40
employees] is insufficient to maintain standards and quality in the delivery of HR
services and to address employee concerns. So we intend to increase the strength of
the HR function in the future; this is quite a high ratio for a bank of our size.
(TRADHR1)
The other exception was case-study bank WESTERN BANK which had a ratio of
1:49 with a total strength of 10 HR employees for the entire workforce of 490
employees. The HR managers interviewed in this case-study bank highlighted that
only 10 employees in the HR function meant that all HR polices, their
implementation, associated administrative work, involvement in strategic input and
any other HR activities had to be managed by them. In their view this was in real
terms an impossible task and thus there was a requirement to hire more employees in
the HR function for it to perform the multiple roles expected of it from the top
management, line managers and employees. This perspective provides credence to
the position adopted by Reilly and Williams (2006) because the ratio appeared to
indicate that the number HR employees were sufficient to cater for the total
workforce but in actual, they were believed (by the HR managers) to be insufficient
to manage the vast array of HR Activities. Further, the HR Head interviewed at
WESTERN BANK stated that decision making pertaining to strategic and
operational issues both, was largely centralised as one, there was no need for
decentralisation at that time and two, the few HR staff did not permit such
structuring. Based on the evidence highlighted from the data analysed, we suggest
that this could be a reason for the lack of a Corporate HR team in this small sized
and similar case-study banks (ANGLO BANK and TRANSCO BANK) examined.
Additionally, the lack of business partners and Relationship Managers in these banks
may also be related to the small size of the HR employees in these banks. The
comment of the HR Head WESTERN BANK below highlights the implications of a
small HR workforce at the bank.
We are a small bank at the moment but growing steadily. Ill give you two reasons
why we [HR function] believe our strength is insufficient. A critical mass of
employees is always required in any department to perform its core and essential
activities and when one enters a new market [like bank WESTERN BANK],
systems also need to be developed. If you keep these factors in mind I think that we
251
are a little short on head count at the moment because of which my staff sometimes
feels that it is being pulled in too many directions. But, I am not apprehensive
because as the bank grows steadily, the ratio will automatically improve.
(WESTHR1)
The HR managers interviewed at VINTAGE BANK stated that the large workforce
of the department / function was quite rational considering the wide branch network
of the bank and the focus of the line managers on efficiency and quality in the
delivery of HR services. Additionally, the HR Head interviewed stated that unless
the IT infrastructure at the bank and the skill-set of the HR employees improved,
there was no possibility of structuring the operations of the HR function on the lines
of decentralisation. Hence, we suggest that in this case, it was not the HR staff to
employee ratio or size of the HR function which appeared to direct the actions of the
HR Head that were related to the structuring of the operations of the HR function but
it was probably the skill-set of HR employees and the inadequate IT infrastructure.
252
Moreover, in the remaining two case-study banks MODERN BANK and GLOBAL
BANK, the HR managers interviewed appeared to be satisfied with their existing HR
staff to employee ratio but did express the need to enhance the strength of the HR
function with the expansion of the bank in at least MODERN BANK. The HR Head
interviewed at GLOBAL BANK stated that while managing 114 employees per HR
manager appeared to be quite high a ratio, the function was structured in a manner
where they could manage this work. He highlighted the role of an effective IT
infrastructure and an adequate skill-set of HR employees as the two factors which
influence the structure of the HR function more than the ratio per se. In his opinion
even if he had double the HR staff but with insufficient specialist expertise / skills to
253
perform independently it would not have been possible to structure the HR function
with a specialist Centre and to manage the HR function with decentralised
operations. Hence it appears that the HR staff to employee ratio alone cannot
facilitate or impede the structuring of the HR function.
However, the HR Head interviewed at MODERN BANK appeared to adopt the view
that the number of employees in the HR function and their expertise and skills in the
HR area were critical in decisions pertaining to the structure to choose for the HR
function. In his view, the HR function at MODERN BANK was only able to
decentralise its operations after they (HR function) had grown to a size where it was
feasible to locate a sizeable number of employees in different locations according to
the branch network / operations of the bank. Additionally, he also stated that apart
from the critical numbers, it was important to assess the skills possessed by these
individuals while deciding on the structure of the HR function and its operations.
Summary
To summarise, an examination of the data related to the HR staff to employee ratio
in the case-study banks studied revealed that there appeared to be at least some
influence of the ratio and the total strength of the HR employees on the structural
changes made in the HR function.
from the exceptions of TRADITIONAL BANK and WESTERN BANK, the ratio
varied in a zone of 0-30 percent in the remaining case-study banks.
In
ANGLO BANK and TRANSCO BANK as well. Hence, it appeared that there was
254
at this stage in their operations (small size) there was neither a need nor the
opportunity due to few HR employees for the three banks to structure the HR
function and its operations in a different way.
GLOBAL BANK and MODERN BANK related to the size of the HR function; at
MODERN BANK, the contention was that without a critical number of HR
employees, no structural changes were possible while at GLOBAL BANK the
consideration was that no matter what the strength of the function, if the IT
infrastructure, skill-set and business acumen were inadequate no strategic gains
could be realized. Hence we suggest that as stated by Reilly and Williams (2006),
the HR staff to employee ratio alone is not sufficient to indicate the influence of this
may have on the structure of the HR function; for this, there is a need to integrate
other factors like size of the organisation, operations, skill-set, business acumen and
IT infrastructure for example.
employees lies both in the literature reviewed in chapter 2 and in the data emerging
from the case-study banks examined.
Brockbank (2005), Ramlall (2006), Ulrich et al., (2008), Caldwell (2008) and
Francis and Keegan (2006) highlight the need for enhancing the skill-set of HR
employees in order to adopt and perform in the emerging roles such as that of a
business partner and HR specialists. Further, from our analysis of data in chapters 5
and 6 and in this chapter as well there emerges a need for and a shortcoming in the
HR employees related to their skill-set.
256
VINTAGE
CLASSIC
TRADITIONAL
MODERN
GLOBAL
WESTERN
ANGLO
TRANSCO
education
BANK
BANK
BANK
BANK
BANK
BANK
BANK
BANK
Graduate
18
25
15
28
16
Under-
110
59
21
37
14
52
26
180
110
40
73
35
10
11
12
graduate
High
school or
equivalent
Total
The data presented in table 7.4 illustrates the level of educational qualification of the
HR employees. This data was extracted from the documents obtained from the HR
function in the case-study banks and the analysis below is formulated on the basis of
interviews conducted with the HR managers in the banks examined. Additionally,
the degrees were obtained by employees from reputed universities both at home and
abroad but they do not necessarily indicate a specialisation in the field of HR.
However, the interviews with the resourcing / recruitment and selection managers in
the case-study banks revealed that most HR employees either had an MBA / BBA
degree or an equivalent degree in MS Finance and MS / MA HRM. In the case of
MS / MA HRM it was highlighted by the HR managers interviewed that the
employees hired on this degree were largely part of the new induction. Our analysis
highlighted that a significant number of employees in the large sized banks that had
been in operation for more than three to four decades possessed a degree equivalent
to high school which is explained by the fact that the qualification criteria for hiring
at that time was not very high. The HR managers interviewed in these banks
revealed that post-privatization the criteria had increased to a Masters degree for
entry level management positions and to a Bachelors degree for employees / officers
below that. Further, they highlighted that the new inductees with an under-graduate
degree had a relevant degree but they either lacked any sort of job experience or
specifically HR related work experience. Additionally, the graduate level degrees
257
included those employees that were hired from foreign banks in Pakistan and abroad
either at the time of privatization or post-privatization.
Further, we infer from the interviews conducted with the HR Heads in the case-study
banks that the HR function was a blend of seasoned HR professionals and relatively
young but professionally qualified employees. The seasoned professionals were at
times less qualified than the young / new inducted employees who were hired in the
past five to eight years with a degree in Business Administration or HR. According
to the HR Heads, this blend was a consequence of the rapid growth registered by the
banking sector in the past decade which required more hiring, the introduction of
banking reforms which enhanced the educational criteria for hiring and the
development of the HR function in Pakistan which necessitated the hiring of better
qualified employees. Additionally, the evidence examined indicated that the younger
employees were attracted by career opportunities in the HR departments within the
case-study banks and the HR function itself required fresh talent to fill the vacant
positions which increased due to expansion in their banks. Hence, it appears from
the preceding analysis in this section that a large number of the better qualified
employees were mostly fresh inductees who either lacked in any sort of job
experience or HR specific job experience. Additionally, the more experienced HR
employees (not necessarily HR specific experience) were possibly less qualified than
the new inductees. Analysed together, these findings suggest that this could be a
reason for the less than intended strategic contribution of the HR function in the
case-study banks examined and that the gap in relevant qualification and requisite
258
experience may also be contributing to the low profile of the HR function in some
case-study banks examined (see chapter 5).
259
<
VINTAGE
CLASSIC
TRADITIONAL
MODERN
GLOBAL
WESTERN
ANGLO
TRANSCO
BANK
BANK
BANK
BANK
BANK
BANK
BANK
BANK
40
40
16
23
10
90
50
18
38
19
30
15
12
20
180
110
40
73
35
10
11
12
years
<10
years
<15
years
> 15
years
Total
Evidence presented in table 7.5 highlighted three major findings. One, only two
domestic banks that were previously in the ownership of the public sector and were
established four to five decades ago (at the time of interviews) had employees who
had more than 15 years of experience of working in the HR function.
Two,
approximately more than 1/3 of the HR employees in all the case-study banks
barring VINTAGE BANK had less than five years of experience which indicates the
industry trend of increased job mobility as well. Three, at least 50 percent of the HR
employees in the small-sized foreign case-study banks had less than five years of
experience.
In the case of the first finding, the HR managers interviewed highlighted that prior to
privatization, both banks had a policy of job security whereby once an employee
entered the bank, they were ensured long-term employment. Further, they added that
job mobility was not an industry trend at that time due to limited options (four to five
banks) in Pakistan; all the competitor banks were also public sector banks so there
was not much difference in their operations, management, culture and compensation.
Moreover, the employees with less than five years of experience were largely those
who had a Masters degree or at least a Bachelors degree in business administration
and were hired post-privatization. Evidence from the interviews of the HR managers
in both VINTAGE BANK and CLASSIC BANK direct our analysis related to the
skill-set possessed by the HR employees.
260
duration in the HR function in this case does not necessarily reflect a better skill-set
because these HR employees were mostly incumbents who had worked in the HR
function since it was first known as administration and then as personnel department
and performed purely administrative, routine work. In the case of VINTAGE BANK
the HR Head interviewed stated that most of the employees in the HR function with
over 15 or 20 years of experience were reassigned from other departments during the
downsizing phase at the bank and thus only acquired the skills to perform HR
activities while on the job. The interviews of the HR managers in VINTAGE BANK
and CLASSIC BANK also highlighted that since most of the better qualified HR
employees were part of the 1/3 employees who had less HR specific experience, they
had little business acumen and the skill-set also needed to be enhanced.
In the second case, the data examined highlighted that approximately 1/3 of the HR
employees across the case-study banks had less than five years of experience which
apparently indicates that their skill-set may not be sufficient to perform specialist or
strategic activities as intended by the HR function. However, the interviews with the
HR managers in the case-study banks pointed to certain internal dynamics which
made it critical to reassess our initial analysis. The HR managers in GLOBAL
BANK, MODERN BANK, CLASSIC BANK and the remaining small-sized foreign
banks stated that less experience did not necessarily indicate insufficiency in the
skill-set or business acumen because those employees hired after privatization did
not have much experience in the bank but they had some HR specific experience
with other organisations. It is to be noted that as explained in the beginning of this
section, for greater representativeness of the HR employees, the data for all
employees was obtained from the HR function / bank documents but that data did
not include the experience of employees if any, from previous employment.
Additionally, as mentioned in chapter 3, after deregulation of the banking sector, the
increased competition presented by the newly established private sector banks
created job mobility in the banking industry with employees hopping from one
employer to another quite quickly. Similarly, related to the third finding in this case,
evidence examined from the bank documents when corroborated with the interview
of HR managers in the case-study banks revealed that more than 50 percent HR
employees in the small sized foreign banks had less than five years of HR specific
employment at the bank. However, apart from the fact of job mobility in the
261
industry, there was also the factor that two of these banks had only been established
for less than seven years at the time of interviews so their entire workforce was
relatively new. Thus, we suggest that it may be difficult to conclusively establish the
level of skill-set of employees by evaluating the number of years of their service
within the HR function at the case-study banks. Consequently the influence of HR
specific experience on the skill-set of the HR employees can only cautiously be
interpreted on the basis of the opinion highlighted by senior, line and HR managers
(in previous chapters under the heading of perspective of HR and line managers and
in following section - 7.5.4. as well) interviewed in the case-study banks who
pointed to inadequacies in the skill-set and business acumen of the HR employees.
obtained from the case-study banks and the interviews of HR managers indicated
that in most banks examined, the formal training provided to HR employees was in
the areas of soft skills and to some extent HR practices like performance
management, compensation and recruitment and selection.
The HR managers
interviewed in the domestic banks stated that at present (time of interviews) there
was an emphasis on both on the job and classroom training to equip employees with
skills in non-specialised areas with limited opportunities for specialist training. This
they said was due to the focus on improving communication and negotiation skills
especially in the privatized banks where the workforce was segmented between
incumbents and new hired employees which created issues in communication,
information sharing and resistance by the incumbent employees. GLOBAL BANK
appeared to be an exception where some training opportunities were provided to HR
managers (mostly senior and key middle management positions) to enhance their
business knowledge and to equip them with skills in strategy planning and
formulation. Further, HR managers in the case-study banks stated that on-the-job
training was being imparted to Relationship Managers and the fresh (young)
employees who were associated with the Corporate HR team.
262
Further, our analysis also highlighted that the foreign owned banks (GLOBAL
BANK, WESTERN BANK, ANGLO BANK and TRANSCO BANK) had a
comparatively greater emphasis on providing function specific training which
according to their HR Head interviewed was at times designed at their global
corporate offices and was conducted at subsidiaries world over. For example, at
GLOBAL BANK there were training programs which oriented their HR employees
in requisite skills for performing specialised HR activities.
In the perception of HR managers interviewed across the case-study banks there was
an inadequacy in the skill-set of HR employees with regards to strategic orientation
and business knowledge. They also agreed with the perception of line managers in
the domestic banks that there was even a need to enhance the skills of HR employees
in specialized (functional) HR areas like performance management and recruitment
and selection etc., which they attributed to the existing mix of employees in the HR
function. The young / new hired employees were better qualified with relevant
degrees but lacked experienced while a majority of the incumbent employees needed
to enhance their skills even in areas like IT and communication and hence the
emphasis on soft skill training programmes. The HR managers across the case-study
banks also highlighted that their attempt to train the employees was at times impeded
by the excessive administrative workload because of which they were unable to
impart training.
263
Based on the interviews with senior and line managers in the case-study banks, our
analysis highlighted that there was almost a consensus amongst those interviewed
that the existing skill-set of HR employees and the level of their business acumen
was inadequate for the function to adopt a strategic role. Further, we found that
those interviewed perceived that the skills related to performance of a strategic role
were possibly the weakest in comparison with the skills required to perform other
HR roles such as service delivery, employee relations, some specialist tasks and the
associated administrative work. The senior managers interviewed across the casestudy banks (more specifically the domestic banks) also highlighted that one reason
for the low skill-set related to the strategic role was the fact that the HR function had
only recently shifted towards performing this role. Additionally, the function was
still in the development phase so efforts were being made to develop the skills of its
employees to better suit this new role (strategic role). Related to VINTAGE BANK,
based on the evidence analyzed from the interviews of the HR managers at this bank,
we can suggest that a reason for weak the strategic capacity of the HR employees
was the fact that they were given limited opportunity to perform in this capacity and
consequently they neither possessed these skills nor did the HR function emphasise
on their acquisition.
GLOBAL BANK was an exception amongst the banks investigated in that the line
managers interviewed here perceived that the HR employees had developed a skillset which enhanced the functions ability to perform a strategic role. However, they
contended that the strategic abilities of the HR employees needed to be strengthened
further and business acumen was an area where the HR function was predominantly
weak, with the exception of few senior employees of the function. According to the
senior managers interviewed at GLOBAL BANK, the HR leadership at the bank had
focused on developing generalists as well as specialist skills of its employees which
were required under the prevailing HR structure that had separately demarcated roles
of shared services, expertise and business partners. They added that this structure
aided the HR function to concentrate on better strategic integration with the business
needs of the bank. Further, according to the line managers interviewed at GLOBAL
BANK, the structure of the HR function enabled them to identify the relevant person
for HR support. However, one line manager commented,
264
I believe that the HR employees in the service delivery Centres need to improve
their communication and customer service skills. (GLOLM6)
The issue of insufficient business acumen was not only the concern of line managers
at GLOBAL BANK but it emerged in the interviews of line managers in the other
case-study banks as well. The emphasis was stronger in the domestic case-study
banks that were in the initial stages of development of the HR function with a
strategic perspective in view, as the incumbent employees appeared weak in terms of
qualification and a significant number of the fresh hired HR employees lacked both
business and HR specific experience. The line managers in the three small-sized
banks also highlighted the need for better business acumen but they clearly identified
that the HR Head and senior HR employees possessed the required business acumen
and it was only the younger employees who were hired fresh that needed to be
developed in this area. It is pertinent to mention here that any strategic level input
provided or business needs met of the line and senior managers in these case-study
banks was the responsibility of the HR Head as there was no Corporate HR team,
Relationship Managers or business partners. Thus, it is probably due to this fact that
the line and senior managers placed a lesser emphasis on business acumen as their
contact was directly with the HR Head.
Moreover, the evidence analysed from the interviews of line manages in the casestudy banks (barring GLOBAL BANK to an extent) indicated that they perceived the
skill-set of HR personnel related to service delivery and specialist activities had
improved significantly. GLOBAL BANK was an exception as stated above, because
the line managers interviewed here perceived that in addition to the skill-set required
for service delivery or specialist input, some HR managers also possessed the skills
required to perform in a strategic capacity. The comment of a line manager at
CLASSIC BANK highlights the recognition of an adequate skill-set to perform in
the role of a specialist and simultaneously points to the need for developing greater
265
business acumen. This comment is fairly represents and illustrates the perception of
HR managers interviewed in the other case-study banks as well but the
recommendation for rotation is specific to CLASSIC BANK only.
I am generally satisfied with the skill-set of the HR personnel but they need to
direct their specialist skills towards contributing and providing business solutions in
their relevant areas. I can suggest to them [HR Head] that if they want greater
involvement in strategic issues they need to rotate their inexperienced staff in
different business units in the initials years so they can develop a better
understanding of our issues and requirements. (CLASLM4)
Further, during their interviews the line managers in all case-study banks stated that
the HR employees were well-equipped to perform the administrative roles which we
suggest is possibly because the HR function had been performing this role
traditionally and had thus developed a strong skill-set in the area over a period of
time. Even so, line managers in VINTAGE BANK and CLASSIC BANK
highlighted skill gaps in the areas of business operations and IT which in their
perception weakened the capacity of the HR employees to perform admin work that
had recently been automated. These banks were previously in the public sector and a
large number of their HR employees were used to manually performing work.
According to line managers interviewed, even after privatization, the incumbent HR
managers were resistant to learn the IT skills needed to perform automated processes
/ activities.
Related to the issue of the most challenging / critical skills for HR managers to
develop in the future, responses collated from the interviews of line managers across
the case-study banks appeared to suggest that business knowledge and strategic
orientation were foremost. Comments from senior managers in the case-study banks
also support the perception of line managers in this regard. However, some of those
interviewed, especially in the domestic banks highlighted that there was a need for
the HR employees to build their networking and leadership skills if they wanted to
enhance the profile the HR function. The comment below from a line manager in
MODERN BANK highlights the implications of a lack in business acumen and
strategic orientation and illustrates how structural changes intended for strategic
contribution can be impeded because of inadequacy of skills.
266
Further, the comments below from two senior managers in the domestic banks
examined indicate the perception of senior managers related to the skills of
leadership and networking.
They [HR function] complain of not being involved in strategic matters of the
organisation but what I feel is that this situation can only improve if they develop
the capacity for leadership. This will drive others [business units] to accept them, to
recognize their potential. I feel, right now they [HR] are equally to be blamed for
what they call lack of involvement because their people across levels [hierarchy]
neither have the skills to actively network with line managers nor do they possess
the leadership capability to represent the HR function. (VINSM3)
A lot of non-HR employees will have told you that the HR people lack the ability to
think strategically and business knowledge but to me foremost are the skills of
networking, convincing or influencing the decision makers and to some extent
leadership. All the rest comes later. You need to create space where there is none;
we [business heads] do it most of the times when we are fighting for resources, our
products our markets, our people, which is exactly what HR needs to do. But for
that, influencing skills, leadership and networking are important.
Strategic
In addition, in the domestic case-study banks there was a perception that specialist
skills which were required for designing and implementing core HR policies and
practices needed to be strengthened. Line managers interviewed contended that a
larger number of HR personnel needed to acquire these skills as service delivery was
a major concern in view of the competitive environment they were operating in.
Line managers interviewed in VINTAGE BANK, TRADITIONAL BANK,
CLASSIC BANK and MODERN BANK also highlighted the need for HR
employees to acquire innovative skills to provide better solutions in service delivery.
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The comment of a line manager illustrates this perception and is reflective of the
views of many line managers interviewed in the remaining three banks as well.
I think they [HR function] need to induct some fresh talent in HR. They are still
concentrating on providing services through the traditional techniques but a lot has
changed in the outside world and even in the industry as well [in Pakistan]. HR
work is now being handling in many new and innovative ways so I think HR needs
to enhance the more creative and innovative streak of their employees and provide
us some new and better solutions to people management issues. (TRADLM3)
Further, in the foreign case-study banks studied, the data analysed did not indicate
much emphasis on the skill of innovation / creativity possibly because a number of
their practices / policies and procedures emanated from the headquarters and were
thus better on this criteria. In addition, similar to the domestic case-study banks, the
line managers interviewed in the foreign case-study banks also stated that the fresh
hired employees though possessed better qualification, needed to acquire specialist
skills if they were to develop as a key HR manager in the future.
Summary
To summarise, from our analysis based on the interviews conducted and
triangulation with documents of the case-study banks, it appeared that the weak
business knowledge and strategic orientation of HR employees was perceived as a
critical inadequacy in their skill-set by line managers. This perception was better in
GLOBAL BANK where the business partners operated alongside the line managers.
In the remaining three foreign case-study banks the perception was better for the
senior HR managers as line managers mostly contacted them because the remaining
HR employees were mostly inexperienced and fresh out of professional universities.
In the domestic banks there was a greater emphasis on this perception possibly
because the HR function was in the early stages of development and adoption of the
strategic role and hence needed to develop this newly emerging skill-set. In
VINTAGE BANK the HR managers also highlighted that they were given nearly no
opportunity to perform in the strategic role which limited the possibility of acquiring
the skills while on the job. Thus, in general, across the case-study banks the overall
inadequacy in these skills appeared to impede the intention of the HR function to
perform a significantly enhanced strategic role.
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Our analysis also indicated that the number of years of HR experience needed to be
interpreted with caution in this study at least, for the following reasons. One, in the
case-study banks examined, longer service in the HR function did not indicate a
better skill-set because most of these employees were incumbents who primarily had
experience of performing administrative activities and had not updated their skill-set
over the years. Two, since our data on HR specific experience pertained to all
employees (for better representativeness) and was extracted from the bank
documents, it only provided the length of experience in the particular case-study
bank. As a consequence, some employees who appeared low on HR specific
experience (specifically those hired in senior and key middle management positions
from foreign banks) actually had prior experience of working in the HR function in
other organisation which could not be factored in. Thus, we could not conclusively
establish the influence of HR specific experience on the skill-set of HR employees
and we suggest that the numeric data be interpreted in conjunction with the
perspective of HR and line managers that predominantly pointed to an inadequacy in
the strategic orientation and business knowledge of HR employees.
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7.6. Conclusion
A key finding of this chapter was the focus of the HR function on gaining
operational excellence in service delivery (which in the perspective of line managers
was a key driver for the structural changes) which limited to an extent, the intent to
achieve greater strategic orientation. This is because generally, most of the
initiatives, resources, time and training programmes conducted for skill enhancement
were devoted to enhancing the service delivery and little time was available with the
Corporate HR team, Heads of specialist clusters and Relationship Managers to
concentrate on providing strategic input or value added activities. Additionally, the
excessive administrative workload limited the opportunities to develop the HR
employees and the scarcity of skilled HR employees resulted in the clustering of
most meaningful activities under few HR employees who were also monitoring the
related administrative workload which restricted their input in strategic matters. We
suggest that these issues probably stemmed from the early development stages of the
HR function in the case-study banks. GLOBAL BANK appeared to be an exception
and is highlighted in greater detail below.
Further, our analysis indicated that while the Corporate HR team was established
with the intent to provide more strategic input, the equally pressing underpinned
reasons of achieving control, ensuring consistency and standards in delivery of HR
services and the inadequate skills of HR employees across hierarchical levels limited
the strategic outcome of this structural dimension.
adoption of a three legged model facilitated the creation of time for senior HR
employees to actively participate in various strategic forums. The adoption of the
clustering and segmentation technique to achieve specialisation and enhance the
involvement of the related HR manager in policy formulation also did not appear to
significantly influence the adoption of a strategic role by the HR function. This is
because of the bundling of multiple HR activities under one skilled / specialist HR
employee who was unable to detangle from the allied administrative work. This
structural setting also deprived the cluster heads to develop a centre of expertise for
their specific areas. Consequently line managers kept approaching the Corporate HR
team for specialist input and impeded their effort for greater strategic contribution.
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commission the services of the HR function on behalf of the business unit because a
larger majority were associated with regions only, their lack of business knowledge
and their scope of work - to providing operational support. GLOBAL BANK again
seemed to be an exception with positions of business partners in addition to
Relationship Managers.
large size of the bank, their wide branch network and large workforce rendered that
strength to be insufficient as well.
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Hence, we conclude that the evidence examined was largely unable to identify a
significant increase in the performance of strategic work by the HR function due to
the change in its structure, in the case-study banks. GLOBAL BANK appeared to be
an exception from the other seven case-study banks with the implementation of the
three legged structure which facilitated the performance of multiple HR roles like
strategic (business partners), operational (Centre of Shared Services) and specialist
(Centre of Expertise). In the other banks investigated, there was evidence that some
structural initiatives were undertaken with the intent to gain some strategic leverage
for the HR function. However, due to the early stages of development of the HR
function, priorities of line manager for better service delivery, lack of time,
inadequacies in the IT infrastructure and most importantly an out-dated skill-set of
HR employees, it appeared that little realisation of this intent was achieved.
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274
The analysis and findings of this research are based on an examination of the eight
case-study banks which was carried out through in-depth, semi-structured interviews
and a triangulation with bank documents, to draw meaningful inferences. In total, 85
interviews of HR managers, senior managers, line managers and industry experts
were conducted to develop a more comprehensive and holistic data-set, which
catered for the inclusion of varied perspectives and highlighted the different
perceptions and understandings of multiple stakeholders, related to the same HR
phenomenon / aspect. Additionally, this variety in the perspectives of the multiple
stakeholders provided interesting insights and conflicting views which enriched our
analysis. Further, the case study approach towards thesis design and field research
produced numerous findings which enabled the researcher to offer a contextualized
description of the role being performed by the HR function and the development of
the strategic role (albeit to a limited scale) in the case-study banks examined.
This chapter is divided into seven sections, each of which discusses the wider
implications of the results summarized below. Section one presents a summary of
the key findings of the research and the influence of the context of Pakistan on the
state of the HR function in the case-study banks.
influence of the organisation specific factors on the state of the HR function and the
extent of the strategic role adopted by the HR function. Section three discusses the
role performed by the HR function in the case-study banks with an emphasis on the
debates related to role typologies and the indicators which can provide evidence of
the presence of a strategic role of the HR function. Section four integrates the
influence of devolution and section five elaborates on the influence of the HR
structure and skill-set of HR employees, on the intent of the HR function to perform
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a strategic role. Section six examines the limitations of this study and the resultant
areas for future research which is followed by a conclusion to this thesis.
Thirdly, findings emerging from our data in Chapter 7 suggest that while there were
changes in the way the HR function was structured in the case-study banks, there
was a limited influence of the changes on the role performed by the HR function.
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While the changes were made with the intent to facilitate the dispensation of some
sort of a strategic role by the HR function, the underpinned considerations leading to
the changes which were primarily driven by priorities of line managers, dearth of
skilled HR personnel, financial concerns and viability of moving infrastructure,
restricted the achievement of the intended objective. Fourthly, the findings indicated
that lack of an adequate skill-set of the HR employees led to credibility concerns of
line managers to involve the HR function in strategic matters. There was also an
issue of considerable variation in the skill-set of employees regardless of their
education level and experience in the HR function due to the composition of the
workforce. The incumbent employees with greater experience and less qualification
had an out-dated skill-set because it had not upgraded over the years while the newly
hired, more qualified but less experienced employees lacked the business acumen
and strategic outlook needed to perform in a strategic role. Hence, in general, the
inadequate skill-set of HR employees appeared to restrict their intent to perform a
greater strategic role in the case-study banks. Lastly, GLOBAL BANK appeared as
the only exception in our sample of eight case-study banks because it had adopted a
three legged HR structure aligned with its corporate HR structure at the global level.
The distinct differences from the other banks examined are highlighted in each of the
sections below.
negligible research in the context of Pakistan, in the field of HRM and especially
related to the HR functions development, role, structure and skill-set. Thus, this
study will add to literature, the unique perspective of the HR function in Pakistan
which according to Khilji (2002) has traditionally been relegated to the fringes of the
organisation. She reported that human resource management is still perceived to be
a support function in the context of Pakistan and it has been unable to demonstrate
the value it can add to the organisation. This discussion will provide an opportunity
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We highlighted in chapter 3 that the derailing of the political process after every few
resulted in the absence of strong institutions in Pakistan. Our research suggests that
the implications of weakened institutions were far reaching.
findings provide evidence that the domestic case-study banks, especially in the
public sector (VINTAGE BANK and CLASSIC BANK), were unable to develop
their people, processes and infrastructure with the changing demands of the time.
There was also considerable evidence of the absence of institutional mechanisms
which led to ad hoc decision making and in the case-study banks there were
examples where the HR function was not institutionally embedded in the
organisation but was rather embodied by the HR Head. This suggests a reliance on
individuals rather than systems in organisations and clearly indicates that the HR
function was in its early developmental stages (at least in the domestic banks), in the
case-study organisations studied.
Of significance for our research was also the fact that the prevailing corporate
culture stemmed from the cultural and religious norms of Pakistan. The organisation
culture can be defined in general, as highly formal, with a tall hierarchy, centralised
decision making and a dependence on strict compliance of rules and regulations.
The hierarchy and centralised decision making were a reflection of the high power
distance in the society which valued senior management because of their seniority,
age and experience. Thus the policy decisions were made at the top and were
cascaded to the bottom and the senior employees felt little need to upgrade their
skills. Additionally, due to the lack of any incentive do develop new and young
employees, there appeared no significant trend in Pakistan for senior employees to
encourage the new comers to develop.
Similar patterns of the organisational culture emerged from our research as there was
evidence of centralised decision making in five of the eight case-study banks
examined. Of the three remaining banks (GLOBAL BANK, MODERN BANK and
CLASSIC BANK), where centralisation with decentralisation was evident, in the
two domestic banks MODERN BANK and CLASSIC BANK some decentralisation
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occurred in certain HR practices but policy decisions remained centralised with the
respective corporate HR teams. In terms of formalisation and compliance with rules
and regulations our findings highlighted that in the case-study banks, line managers
interviewed shared concerns of HR following policy guidelines rather than
addressing the changing business needs such need for immediate hiring in a sector
with high employee mobility. Also, we found that seniority and age were indeed
valued more than performance and initiative, at least before the change in workforce
dynamics. This explains why there were taller hierarchies evident in the large and
medium sized banks mostly, and also points to the role of incumbent employees in
resisting the change in role of the HR function in the domestic banks, especially the
two large banks where incumbent employees were present in larger numbers.
Additionally, our findings also highlighted that the incumbent employees had an
outdated skill-set which is probably because there was no encouragement to develop
employees because it was considered that employees would automatically learn with
age and experience.
Further, chapter 3 highlighted that Pakistans economy was historically agriculture
driven but that in recent years the service sector had primarily registered consistent
growth. Our findings in the case-study banks also suggest that the banking sector
registered high growth in the decade commencing 2000 and that the banks added
new products and consumer segments in their portfolio which led to the need for
hiring employees with a different set of expertise and skills.
In addition, the
Additionally, the new foreign banks established in Pakistan led to the emergence of a
distinct culture and the introduction of contemporary HR practices which were
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In terms of the other reforms enumerated in the previous paragraph, we found that
there was a new category of employees who were hired across the case-study banks
and this change in the composition of employees was also reflected in the workforce
employed in the HR function.
professional bankers from foreign banks abroad who were tasked to turnaround the
banks.
Also included were young and newly hired employees who lacked
experience and a requisite skill-set but were willing to learn, change and were more
qualified than the incumbent employees.
dynamics will be discussed later, in the section pertaining to the skill-set of the HR
280
employees.
empirical chapters that the new category of employees hired in the HR function had
an influence on the state of the HR function. While they were unable to develop the
HR function to perform a truly strategic role in the case-study banks investigated,
they appeared to have introduced a shift in the role the HR function had historically
been performing in these banks. Further, they appeared to define the intent of the
HR function to dispense a more strategic role in the organisations, at the least and
they were able to introduce some contemporary HR practices in the banks.
HR function
Organisational contingencies
Role
Influence
Size
Ownership structure
Devolution
Skill-set
Pace of development
Related to the size (in terms of number of employees) of the case-study banks, as
discussed in chapter four and onwards, the sample banks comprised of three different
sizes and included small, medium and large sized banks. Based on our findings in
the empirical chapters we suggest that the size of the organisation has an influence
on the structure adopted by the HR function, at least in the case-study banks
examined in this research. For example, the large and medium sized banks all had a
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corporate HR team while in the three small sized banks (WESTERN BANK,
ANGLO BANK and TRANSCO BANK) the HR Head was responsible for all the
decision making and activities pertaining to strategic matters. The reason for not
having a corporate HR team in the small sized banks was the sheer small size of the
HR function (10 to 12 employees). In addition, the small size of the three foreign
banks WESTERN BANK, ANGLO BANK and TRANSCO BANK, made it in
infeasible (financially and operationally) to adopt this structure while the HR
function in GLOBAL BANK adopted a three legged model, aligned with its global
HR structure. Similarly, the positions of relationship managers were not introduced
in the small sized banks primarily because of the small workforce size, specifically
in the HR function, which made it necessary for the HR Head to act in the capacity
of a business partner and / or relationship manager.
Also, our findings pointed to the fact that the skill-set of employees in the large sized
banks with a larger number of incumbent employees was more out-dated in
comparison with the other banks examined. In chapter 7 we highlight the fact that
the skill-set of HR employees in the two large banks was weak in terms of IT skills,
basic communication and negotiation. Additionally, the sheer size of these banks
made it difficult to implement changes in various HR areas at a pace similar to that
of the medium or small sized banks which slowed down the development of the HR
function in these banks.
In the case of ownership of the case-study banks, our sample which included four
domestic and four foreign banks illustrated certain dissimilarities in the findings due
to this organisational contingency. The foreign banks adopted certain structural
configurations of the HR function due to a similar model applied across the globe.
For example, GLOBAL BANK adopted the three legged model because of the
global HR function was structured in a similar manner. We also found that the
extent of the strategic role performed by the HR function was in some ways
influenced by the ownership structure of the case-study banks. For example the HR
managers in three foreign banks WESTERN BANK, ANGLO BANK and
TRANSCO BANK highlighted that they were not involved in formulating HR
strategies or defining HR policies because they were cascaded down from the global
headquarter. Hence their role in strategy formulation was limited in many ways and
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In the domestic banks, the legacy effects which were evident in the resistance and
outmoded skill-set of the HR employees and the historically low profile associated
with the HR function influenced the extent of strategic role it could perform, despite
the intent to do so. For example, in bank VINTAGE BANK (to a greater extent) as
well as the other domestic banks, there was a perception amongst the line managers
that strategy formulation was not a role to be performed by the HR function.
Historically, in these banks the HR function had been performing administrative,
operational work only and there was no understanding amongst the line managers
that the HR function had a role beyond this, in the organisation. In two case-study
banks (VINTAGE BANK and TRADITIONAL BANK) the decision making related
to HR activities and matters had always been the domain of line managers so the
devolution (shifting of HR activities to line managers) which appeared to have taken
place had actually never occurred. Since line managers always dominated the HR
function, they continued to view the HR activities with disdain and did not want to
share in their dispensation, which limited the extent of devolution in HR practices.
Apart from the consequence of this limited devolution on the availability of time to
focus on strategic initiatives, there was also the fact that line managers had never
given the HR function the credibility and profile required for participating and
involvement in strategic matters of the organisation. Hence, evidence indicated that
despite the intent to perform a strategic role and the structural changes made in the
HR function to facilitate the dispensation of such a role, the HR function in the
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domestic banks was yet only struggling to gain recognition and credibility. This can
be attributed to the early developmental stages of the HR function as well. In
chapter 7 we presented evidence from the interviews of senior managers in the casestudy banks which highlighted the challenge, at least in the domestic case-study
banks, to first develop negotiation, networking and leadership skills in the HR
employees.
credibility in the case-study banks which was vital for undertaking a change in role
orientation from administrative / operational to strategic. Hence, we conclude that
organisational factors do influence the form (structure), skill-set and role adopted by
the HR function in organisation. In this case, the specific reference is, the eight casestudy banks examined.
The discussion on the strategic role of the HR function has gained much attention of
researchers in recent years, perhaps due to the significance prescriptive literature
(Ulrich and Beatty, 2001; Ulrich and Brockbank, 2005; Ulrich, 1997) has associated
with this role. Additionally, the literature reviewed in chapter 2 suggests that the
strategic role of the HR function yields numerous benefits for organisations (Ulrich,
1997; Truss et al. 2002) that range from its effect on the bottom line performance
(Paauwee, 2004 ; Hope Hailey et al., 2005) to stimulating appropriate employee
behaviour (Purcell 2003) and improving productivity (Wright & Snell, 1998).
284
Also, empirical studies like McCracken and Heaton (2012), Lengnick-Hall et al.,
(2009), Jamrog and Overholt (2004), Truss et al., (2002) and Guest and King (2004)
suggest that even if the strategic role is not essential, it is desired. Further, according
to Truss (2009) empirical literature also discusses the role typologies by
distinguishing them on a continuum, from operational to strategic and in recent years
by incorporating the context as well (Lengnick-Hall et al., 2009). Our findings
conform to this body of literature because we found that HR managers across the
case-study banks perceived that gaining a strategic role orientation was the intent and
a foremost driver leading to changes in the HR function. In addition, the HR
managers emphasised that the underpinned rationale for changes in the HR structure
and the attempts made at devolution of HR activities to line managers, across the
case-study banks, were also undertaken to create more time for HR managers to
involve in strategic activities.
The foremost result revealed in our study responds to our first research question
related to the current state of the HR function in the banks examined in Pakistan and
the extent to which (if at all) the HR function was performing what can be termed a
strategic role. Our findings highlighted that there was no significant presence of a
strategic role being performed by the HR function in the case-study banks examined,
despite the stated intent and desire of the HR function to adopt a more strategic role.
This finding confirms the results of previous studies like Truss (2008) and Wright
(2008) which report that empirically the HR function primarily continues to perform
an administrative role and remains reactive and Wright (2004), who report that the
any substantial changes in the role of the HR function remain both partial and
inconclusive, according to research. Similarly, the findings endorse the results of
studies by CabralCardoso (2004) and Farndale (2005) who posit that the HR
function is not majorly involved in the strategic decision making of the organisation.
However, our findings indicated that a shift towards performing some semblance of
a strategic role was evident in three case-study banks (CLASSIC BANK, MODERN
BANK and ANGLO BANK) and there was an intent / attempt to develop a strategic
role in three other banks (TRADITIONAL BANK, WESTERN BANK and
TRANSCO BANK). VINTAGE BANK appeared to be the only bank where the
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intent to adopt a strategic role was not quite evident 20. GLOBAL BANK was an
exception where evidence presented indicated the presence of some strategic role
alongside the focus on achieving operational excellence.
Additionally, our analysis in the remaining case-study banks (especially the domestic
banks) reveals that despite the intent of the HR function to adopt a more strategic
role the emphasis in actual, remained on gaining operational excellence and
improving the quality and standards in service delivery. This was perhaps because
of the demand placed by line managers to address the immediate operational needs
(see chapter 5). In the case of the domestic banks, another reason was the state of
development of the HR function. We highlighted in section 8.1. above and chapters
5 and 7 that the HR function started to develop in the domestic banks post reforms
and privatization which meant that they had yet to formalise, upgrade and introduce
HR practices and processes. Hence, there was a substantial focus on improving the
performance of the HR function in these areas. Our finding confirms previous
research by Ulrich (1997), Caldwell (2003), Torrington et al., (2008) which posits
that HR effectiveness can be achieved only when business needs are fulfilled, for
which it is necessary that both the administrative and strategic role are dispensed and
operational excellence is also achieved.
Moreover, our analysis highlighted that the strategic role of the HR function was
beset by the ambiguous comprehension of its concept, the contrasting perceptions of
HR and line managers related to the utility of this role and the disparate opinions on
what constituted as evidence of such a role, in the case-study banks. For example,
line managers in most case-study banks contended that HRs utility was in designing
best practices, in addressing business concerns and in providing excellent operational
and service support while HR managers stated that the function could add value
through strategic input and partnering in long-term initiatives, in addition to the
purely operational role.
A reason for the ambiguity in the strategic role was also the fact that this was an
emerging role for the HR function in the case-study banks which was challenged by
20
The discussion on the indicators of presence of a strategic HR role will provide details of this
assessment.
286
the incumbent employees largely, as they were used to the status quo in which
traditionally and historically the HR function had no position in the strategy
formulation process. This finding confirms the position adopted by Morley et al.,
(2006) in their research which states that the contemporary (strategic) role of HR is
not acknowledged due to legacy concerns and is thus continuously challenged in
organisations. Also, it confirms the position taken by Truss (2008), Caldwell (2003)
and Morley et al., (2006), who purport that the new roles added to the ambiguity and
created role conflict. We add that since the strategic role had newly developed in the
case-study banks, there were issues of imbalances in the existing power structure and
the relationship between HR and line managers which resulted in conflict and
ambiguity related to the boundaries defined for the strategic role of the HR function.
The discussion in the following paragraphs relates to the evidence and indicators
studied in this research to determine whether or not the HR function was performing
what could be termed as a strategic role (see fig. 8.2). The choice of the dimensions
selected to study the presence of this role was grounded in extant literature (as
highlighted below). It was also driven by the intent to uncover the black box of what
constitutes a strategic role in the case-study banks and the assumption that a broad
yet integrated spectrum of description was required to understand this complex
phenomenon. The dimensions include the representation and participation of the HR
Head in boardrooms, strategic forums and the education and career background of
the HR Head (Truss, 2008; 2009; Kelly and Gennard, 2007; Hall and Torrington et
al., 2008), the written HR strategy linked with strategic objectives (Truss, 2008;
Golden and Ramanujam, 1985) and the development of long-term, proactive and
transformational HR initiatives (Caldwell, 2003; Guest and King, 2004). As we
discuss in detail below, our analysis indicated that these dimensions had some sort of
a role in establishing the credibility of the HR function and the role it dispensed in
the case-study banks.
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Devolution
- Distribution of HR
practices
- Aspects of devolution
Decision making
Implementation
Influence
Role of the HR
Function
Influence
Skill Set
- Qualification
- HR specific
Experience
- Training
Different skills for
different roles.
Influence
Structure
- Corporate HR team
- Specialists /
Generalists
- Role of relationship
Managers
- Centralisation /
Decentralisation
- Delivery of HR services
- HR to employee ratio
- HR skill-set
In the case of the reporting relationship of the HR Head and representation of the HR
function on the board of directors and in the management committees, our findings
highlighted that the HR function was not represented on the board of directors in any
of the case-study banks and there seemed no intent to do so in the near future. This
finding conflicts to some extent with that of Brandl and Pohlar (2010) who report
that in cases where the HR Head is not part of the Board of Directors, there is an
aspiration on the part of the HR function to gain a seat in the coveted body.
However, this finding confirms the position adopted by Caldwell (2010), who on the
contrary, challenged this notion and claimed that a seat on the board of directors is
not necessary for a strategic role and holds a symbolic value only. Also, Guest and
King (2004) and Caldwell 2004) state that there is a limited influence on the
adoption of a strategic role by the HR function even if it is present on the board of
directors, as the board is not a strategic body. Further, it leads us to suggest that the
HR function can alternately influence decision making through the reporting line and
presence in management committees. A similar position is adopted by Kelly and
Gennard (2007) as well.
288
organisations have made certain symbolic and ritualistic changes in integrating the
HR function with strategy, yet these changes have not resulted in the HR function
dispensing a strategic role. Thus we suggest that symbolic changes must be studied
in conjunction with the embedded factors such as the will of the HR Head, mindset
of the senior management, development stage of the HR function and the traditional /
historic role of the HR function in an organisation. This is because these factors
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appeared to be more profound in their impact on the strategic role of the HR function
than the more apparent factors in our research.
Related to the dimension of disposition of the HR Head, our analysis uncovered that
the profile of the HR Head and their disposition was secondary in nature to the
institutionalised role of HR formalised and embedded position of the HR function in the case-study banks. But where this was absent and the HR function was
embodied by the HR Head themselves, the personal disposition became significant.
Also, our analysis highlighted that where the HR function was institutionalised
(GLOBAL BANK), the strategic role of the HR function appeared to have the
support of senior managers and line managers had a positive mind-set and were
willing to accept this role to some extent. This finding confirms previous results of
Sheehan (2003) and Truss et al., (2002) who posit that where senior management
supports the HR function, there is a greater emphasis on involving the function in
strategic activities which include long-term strategic planning and proactive
initiatives.
Amongst the eight case-study banks, only one bank GLOBAL BANK exhibited a
strategically integrated and streamlined HR function and this exception was
noticeable in its impact. The opinion of HR function in the said bank was included
and given weight in all major decisions and the function had a higher profile and
status in the organisation which leads us to suggest that this high profile was
sustainable. This suggestion gains further credibility from the fact that across the
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This leads us to discuss the dimension of the nature of initiatives undertaken by the
HR function, as an indicator of the presence of a strategic role of the HR function in
the case-study banks examined. According to Truss (2008; 2009), Buyens and De
Vos (2001), Wilkinson and Marchington (2005) and Brockbank (1999), an attempt
to gain strategic orientation by the HR function is evident in the initiatives it
undertakes. Long-term, proactive and transactional activities of the HR function
have been highlighted in extant literature (cited in the preceding sentence) as an
indicator of a strategic role. Our analysis confirms the findings of this body of
literature, because as stated earlier in this chapter, no significant presence of a
strategic role was evident in seven of the eight case-study banks examined. This is
due to the fact that the HR function mostly undertook short-term, reactive and
transactional activities, which according to the researchers indicates a focus of the
HR function on performing an operational role. GLOBAL BANK was an exception
in our sample banks where the HR function was structured distinctly into three
elements and the business partners performed the strategic role related to the HR
function. In the following paragraphs we provide examples of short and long-term
initiatives, reactive and proactive work and transaction and transformational
activities in the case-study banks to support our argument, above.
In the case of short-term and long-term initiatives, our analysis revealed that in four
case-study banks (VINTAGE BANK, TRADITIONAL BANK, WESTERN BANK
and TRANSCO BANK), the HR function was unable to implement a long-term
agenda in the initiatives undertaken which limited its ability to contribute in the
strategic arena. In addition to the low profile assigned to the HR function by line
managers, other factors like the dictation of line managers, insufficient resources of
the HR function and conforming to global standards (foreign banks only) also
impeded the HR functions intent to fulfil this agenda. Line managers dictated the
HR function to address their short-term requirements and their political clout
restricted the HR function from undertaking long-term initiatives on their own. The
evidence provided, highlighted only a few instances in three case-study banks
(MODERN BANK, CLASSIC BANK and GLOBAL BANK) where the HR
function was able to make a deliberate and successful attempt to resist the dictation
of line managers. Moreover, the HR function itself lacked resources and skills to
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develop strategic foresight required for integrating its role with that of the strategic
objectives of the banks.
In the case of proactive vs. reactive initiatives, our analysis again highlighted a shift
in the HR function, which was not very significant, towards taking proactive
initiatives in the case-study banks examined. However, mostly evidence indicated
that the HR function, across the case-study banks (barring GLOBAL BANK)
continued to be directed by line and senior managers in its activities. The senior
management in most cases involved the HR function at the operational stage rather
than giving them an opportunity to take a leadership role in launching their
initiatives and the HR function appeared to invest more time in initiatives related to
the improvement of operational efficiency. Our findings provide credence to the
position adopted by researchers like Cascio (2005), Roehling et al., (2005) and
Wright and Snell (2005) who state that the HR function is now expected to perform a
prominent and proactive role in the organisations but evidence of the extent to which
HR has been successful is yet inconclusive.
We add that the assumption may not hold true for where the structure of the HR
function is not organised based on his model and hence, other organisational factors
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like status of the HR function, legacy effects, development stage and traditional role
of the HR function must be studied in conjunction.
WESTERN BANK, ANGLO BANK and TRANSCO BANK, the small local HR
functions were understaffed and overworked and hence did not have the time,
capacity or mandate to perform transformational work. Our suggestion to extend the
findings of Ulrich (1997) is underpinned in the evidence emerging from at least two
case-study banks (VINTAGE BANK and TRADITIONAL BANK) where the HR
managers in some instances appeared less willing to devolve their work to line
managers out of fear of redundancy. The status of the function in both these banks
was low and traditionally line managers dominated most of the decision making even
in policy areas related to HR.
GLOBAL BANK
lack thereof influenced the intent of the HR function to perform a strategic role. This
discussion will integrate the role of devolution in the debate on the HR function and
its strategic role and will provide answers to our research question which seeks to
uncover how devolution of particular HR responsibilities to line managers (if at all),
influenced the HR functions intent to attain a strategic role orientation in the casestudy banks.
Some additional examples from our research which confirm the findings of previous
studies cited in the preceding paragraph include, in the case of extent of devolution,
the willingness and relatively greater involvement of line managers in HR activities,
in one case-study bank, GLOBAL BANK. One or more of the following could be
the reasons for this greater involvement: support of senior managers for devolution,
the global HR norms and procedures and the three legged structure of the HR
function which facilitated greater interaction between HR and line managers.
Further, related to the shape of devolution, our analysis highlighted that in domestic
banks VINTAGE BANK and TRADITIONAL BANK what appeared to be
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Rather, in these case-study banks, line managers had always dominated the decision
making aspect in most HR activities because historically the HR function had only
performed administrative work (for many decades), the function had a low profile
and it was in the early stages of its development. However, despite the dominance of
line managers in HR activities in these banks, there was not much evidence of the
presence of the HR function in the formulation of the overarching policies. This
leads us to suggest that the involvement of line managers in HR activities does not
necessarily indicate that the HR function is or is becoming strategic in its orientation.
This suggestion needs to be interpreted with caution as we highlight next that
devolution of the decision making aspect may not provide extra time for
participating in strategic forums because it is the implementation aspect of HR
activities which takes most time.
This finding conforms to the views of Cascon-Pereira et al. (2005), because analysed
outwardly it appeared that devolution had occurred to quite an extent but when
viewed in context of their definition, it appeared that devolution of the
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In addition, our analysis in chapter 6 suggests that the HR managers, more so in the
domestic case-study banks, perceived that line managers did not want to undertake
HR work and expected them to deliver the administrative support related to all HR
activities. This is perhaps because of the status line managers had traditionally
attained in these banks and the low profile of the HR function which resulted in the
disdain of line managers to perform HR work. Further, our analysis highlighted that
HR managers believed that the purpose of devolution was to transfer operational
responsibility of HR practices to line managers, in addition to the decision making
aspect, so that they would have time to deliver strategic value to the organisation.
McGuire et al. (2008), Truss (2008) and Caldwell (2003) have previously found that
HR managers perceive that devolution of HR work to line managers can relieve time
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Kulik and
Bainbridge (2006) also found that HR managers perceived devolution provided line
managers an opportunity for greater involvement in the organisation.
In contrast with the perspective of HR managers above, our analysis in the casestudy banks highlighted that line managers perceived that the HR function pushed
tedious and mundane tasks to them on the pretext of attaining a greater strategic
orientation. This finding in part, conforms to the position stated by Conway and
Monks (2010) who highlight that line managers view devolution as a way to increase
their responsibilities in difficult to implement policy areas. Hence, we found that
line managers did not appear to agree with this interpretation of devolution and
considered that instead of implementation, a greater role for them in the decision
making aspect could enable the development of a better HR-line relationship. In our
view this improved relationship could facilitate the transformation of HR into a
strategic function which it intended to, but was unable to attain in the case-study
banks examined. Sheehan (2003) also highlight in their research that a strong HRline relationship can facilitate in building a strategic HR function. Thus, we can
confirm the findings of Renwick (2003) who state that line managers may not
welcome the devolution of HR responsibilities to them.
Further, our analysis in chapter 6 highlighted certain findings which related to the
distribution of HR practices between HR and line managers and indicated that the
HR function continued to perform more of an operational rather than a strategic role.
In conformity with Purcell and Hutchinson (2007), Brandl et al. (2009) and CIPD
(2003; 2007) who highlighted that a only blurry line of division existed in the role
of HR and line managers in the design and implementation of HR practices, we also
found that sketchy boundaries demarcated the roles of the stakeholders.
This was
evident in our findings because we created five distinct categories to understand the
extent of devolution; three of these categories can be identified as those which
comprise the sketchy or blurry boundaries. They include shared, shared with mostly
HR in the lead and shared with mostly line managers in the lead. We add that the
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sketchy boundaries are an impediment for the process of devolution, the lack of
which ultimate restricts the dispensation of a strategic role by the HR function.
Moreover, in conformity with the research by Purcell and Hutchinson (2007) and
Brandl et al. (2009), we found that there were only few areas like employee relations
for example, where the HR function had sole responsibility and in conformance with
Larsen and Brewster (2003) we found that most HR activities were shared between
HR and line managers to a varying extent.
In addition we found that line managers were willing to accept devolution in certain
HR practices like compensation and benefits and recruitment for example, but HR
managers were less willing to devolve in these areas. Earlier, Hope-Hailey et al.,
(1997), also reported that line managers were generally found to be interested in
sharing responsibilities related to resourcing while the HR function maintains a
primary and dominant role in compensation and employee relations. In the domestic
banks at least (especially VINTAGE BANK and TRADITIONAL BANK), we found
that one reason for this was the supposition of HR managers that fragmentation of
the HR activities could threaten the existence of the function. A similar conclusion
was reached by Kulik and Perry (2008) who stated that the HR function is at times
threatened by the fragmentation which results from devolution because it can dilute
the status of the HR function and render it redundant.
decision making and implementation, to some extent, were devolved but with little
willingness of line managers.
Bainbridge (2006) who stated that line managers were more likely to perform
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Another related finding from our study was that, in general, compensation and
benefits (across the case-study banks) and training and development and employee
relations (in the domestic banks) appeared to be the least devolved HR practices.
Lesser devolution in the practice of training and development appears as a unique
finding from our study because extant research (Purcell and Hutchinson, 2007;
Maxwell and Watson, 2006 and Kulik and Bainbridge, 2006) generally indicates that
line managers share in performing this HR activity. Ibid. (2006), state that line
managers enjoy employee coaching, orientation and training as it gives them a
greater sense of satisfaction. The lack of devolution in training and development in
the domestic case-study banks was a result of the separation of the Training /
Learning and Development Department from that of the HR function in at least two
banks (VINTAGE BANK and MODERN BANK); the head of these departments in
both banks reported directly to the CEO / President. Thus, it is apparent that this
activity was considered as a specialist activity for which HR managers were bettered
suited than line managers who would require training for this purpose.
As a
consequence, line managers were not required to provide much support in this
practice because it was managed by the specialists.
Similarly, we found that employee relations was an area least devolved in the
domestic banks while in the foreign banks line managers shared in the dispensation
of this activity because of the global HR procedures and cultural norms of these
case-study banks. The low profile / status of the HR function in the domestic casestudy banks and the time consuming nature of this activity inhibited greater
involvement of line managers in this area. Likewise, low devolution appeared to
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have occurred in the case of compensation and benefits which was intended and had
the support of senior managers. Our findings highlighted that senior managers
wanted decision making and implementation to be centralised in this case because of
concerns related to maintaining consistency and fairness. Earlier, Cascon-Pereira et
al., (2005) also found that the HR function generally retained the financial power in
the case of compensation and benefits, with the willingness of senior managers.
Thus, compensation and benefits was the most contested HR practice in which line
managers wanted to influence decision making but were unable to do so.
Our last major finding related to the devolution of HR practices revolved around the
conflicts in the perception of HR and line managers and consequently the challenges
faced by HR, senior and line managers. The most noteworthy challenges confronted
by line managers included the disdain for HR work, their workload, the priority to
meet business goals, the insufficient skill-set to perform HR work and the lack of
associated rewards and recognition.
The disdain for HR work appeared more strongly in the domestic case-study banks
because of the status of the HR function but across the entire sample of banks line
managers contended that the work of HR should be performed by the function,
otherwise the role of the function would be marginalised in the organisation. In the
case of status of the HR function, the disdain stemmed from the fact that HR was a
support function so the implementation of HR work should be assigned to them in
the capacity of support staff. In the case of a general inclination of line managers to
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avoid performing HR activities, our findings match with those of Whittaker and
Buyens and Ans De Vos (2001), Whittaker and Marchington (2003), Kulik and
Perry (2008), Renwick (2003) and Harris et al., (2002) who state that line managers
do not view HR responsibilities as important enough to warrant their involvement.
Further, we can also confirm findings by Conway and Monks (2010) who suggest
that line managers feel over-burdened with the task of managing the additional HR
responsibilities and Maxwell and Watson (2006) and Gibbs (2003) who found that
line managers were resistant to HR work because of the demands of their own jobs.
This is because our analysis revealed that line managers continued to view the HR
work as a peripheral task appended to their core job and they ranked HR activities as
low on their priority list due to time and resource constraints.
Additionally, we found that line managers were not well equipped to perform in
people management roles and they lacked adequate training in the area. Similar
findings were reported by Stanton et al., (2010) and Marchington and Wilkinson
(2002) who stated that an adequate skill-set was the key to ensuring that line
managers did not make costly mistakes while implementing the HR practices. Also,
Truss and Katz (2002) posit that there is a significant difference in the style of line
managers and the level of their people management skills which creates
inconsistency in the implementation aspect and results in the ineffective delivery of
HR services. We noted similar evidence in our research as some line managers
stated that they were not confident of how to deal with employee concerns and
grievances. Hence, in conformity with Larsen and Brewster (2003), we conclude
that the desire, capacity, ability, training and conservatism of line managers have the
tendency to impede the devolution of HR practices.
Moreover, our analysis highlighted that line managers also had reservations related
to the skill-set of HR employees which they felt was inadequate to perform in a
strategic role.
administrative / operational work for which they were trained. Further, we found
that line managers in the case-study banks perceived that the HR function formulated
restrictive and impractical policies that rendered the application of these policies
difficult. This is in conformity with the findings of Conway and Monks (2010),
Qadeer et al., (2011) and Whittaker and Marchington (2003) who posit that the HR
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function formulates policies that look good on paper but do not translate well in
reality. Lastly, our findings indicated that line managers were of the opinion that HR
policies were not aligned with the business concerns and requirement which made it
difficult to conform to them. For example, we highlighted that abiding by the
procedural requirements created delays in hiring employees and fixing compensation
packages which resulted in lost talent in a competitive market with a high employee
turnover rate, in Pakistan. Our finding conforms to that of Kulik and Perry (2008)
who found that HR policies which were perceived to be in conflict with business
requirements were contested by line managers. These challenges faced by the key
stakeholders emerged as the main barriers to the devolution of HR practices.
strategic in its orientation. Further, we found that aside from the stated intent to
perform a strategic role, in addition to the operation role, the structure of the HR
function underwent changes that were driven by the need to adjust for increased
competition and to reflect the global-subsidiary presence. Similar findings were
earlier reported by Schuler (2000) in the case of competition, Harvey et al., (2000) in
the case of global-subsidiary relationship, Lepak and Snell (1998) in the case of
multiple roles and were more recently implied by Ulrich et al., (2008).
From the analysis reported in Chapter 7, there emerged some noteworthy findings
related to the structure of the HR function in the case-study banks. Firstly, there was
evidence of development in the structure of the HR function which was largely due
to HRs intent to perform a strategic role.
underpinned reasons emerging from our study lead us to suggest that the changes
were primarily a response to meet the demands of line managers for better service
delivery.
Also, despite the presence of a corporate HR team in five of the eight case-study
banks, its influence in strategy formulation was minimal. The corporate HR team in
the banks was inclined towards establishing control, consistency and standards in the
delivery of HR services, in the back drop of an inadequate skill-set of HR employees
and the insufficient availability of HR specialists / experts.
As a result, the
Corporate HR team was limited in its attempt to provide strategic input. Secondly,
our research also unveiled a distinct trend in the changes that occurred in the
structure of the HR function. If anything, the structure of the HR function in most
case-study banks had transformed to achieve greater specialisation. However, in the
immediate future, this specialisation was not aimed at developing a centre of
expertise but instead several HR services were clustered under one specialist to
whom the other HR managers also reported, due to concerns of cost and
convenience.
Relationship Manager in the case-study banks (where the position existed) could
have been developed into that of an HR business partner but this did not happen due
to an inadequate skill-set and their assigned mandate. Hence, our study found that
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the developments in the structure of the HR function did not contribute significantly
towards the effort to perform a strategic role.
Our results do not completely harmonize with either of the two bodies of literature
because the HR function in the case-study banks overtly intended to bring changes in
the structure through introducing some positions similar to those highlighted in
prescriptive literature for developing a strategic focus but in actual the underpinned
reasons pointed towards organisational contingent factors like size, ownership,
availability of expertise, convenience of location and consistency. These factors
form part of the broader variables which define the strategy of an organisation which
is highlighted in the traditional view propagated in most of the empirical literature.
For example, the focus of the HR function was on gaining operational excellence to
meet the immediate demands of line managers which required that most time,
resources, initiatives and training opportunities were channelled in this direction.
This finding is aligned with that of Roebuck (2008) who state that the credibility of
the HR function first and foremost depends on the delivery of core HR services.
Consequently little time was available with the corporate HR team, cluster Heads
and Relationship Managers to perform meaningful strategic work.
Hence, the
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We now discuss the various structural changes that were introduced or were present
in the HR function of the case-study banks examined in order to uncover their
influence (if any) on the role performed by the HR function. Our study revealed that
the corporate HR team was established in the case-study banks (barring the three,
small foreign banks) largely to maintain control, consistency, standards is service
delivery and to facilitate communication but the team was unable to expand in the
intended role of participation in strategy formulation. This was primarily a result of
the corporate HR team being burdened with the transactional work due to the
shortage of expert / skilled HR employees. The business heads resultantly
communicated with members of the corporate team to address their concerns which
shifted the burden of some transaction work on them and they were left with less
time to contribute in a strategic role.
WESTERN BANK, ANGLO BANK and TRANSCO BANK that did not have a
corporate HR layer, the problem of time was even were more critical because the HR
Head who represented the HR function at strategic forums was also monitoring the
transactional HR work with a team of generalists and one or two specialists working
below them.
Further, a hybrid
Related to the trend of specialisation, we highlight that Torrington (1989) argued that
no matter how skilful line managers become with their competencies, there will still
be a place for internal HR activity. The findings from our case-study banks also
align with the position stated by Torrington (1989), because the emerging trend to
structure the HR function in most case-study banks examined was to develop
pockets of specialist teams in specific HR services.
In terms of the specialist teams, the findings emerging from our analysis in chapter 7
indicate that there was a trend in the banks examined to cluster several generalists
under one specialists domain (department or position). The reasons for this practice
included addressing budgetary and cost constraint, the inadequacy of depth and
breadth of skills of HR employees that were needed to develop separate centres for
specialists and generalists. Additionally, the HR function in the three small foreign
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case-study banks was operating with few HR staff which necessitated the clubbing of
some activities under one position.
Our third and last major finding pertaining to changes in the HR function, relates to
the role of the Relationship Managers. This position was created in five case-study
banks (VINTAGE BANK, CLASSIC BANK, TRADITIONAL BANK, MODERN
BANK and GLOBAL BANK) and was similar to that of an HR business partner.
Our stance is grounded in extant research (Caldwell, 2003; Ulrich et al., 2008; Ulrich
and Brockbank, 2005) to the extent that it states that the HR business partner may
either be aligned by department or region. This is because our findings highlight that
the Relationship Managers were aligned either by business units (TRADITIONAL
BANK), geographic regions (CLASSIC BANK and GLOBAL BANK), or both
(VINTAGE BANK and MODERN BANK) and they followed a dual reporting
relationship with HR and regional or business heads. However, our findings deviate
from those of the body of literature cited above with respect to the role performed by
the Relationship Managers. In this case, we found that in all the domestic banks, the
Relationship Managers regardless of the basis of alignment, did not provide strategic
input to line managers. Thus, we suggest that Relationship Managers were similar to
the HR business partners in the approach adopted to align them but they did not
conform to the role of a business partner, as ascribed in existing literature as they
primarily facilitated routine operational work rather than strategic work.
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Additionally, our findings pointed to the fact that the intent behind the institution of
Relationship Managers was to facilitate the attainment of a strategic HR role by
developing them into HR business partners. However, this potential was lost due to
the insufficient skill-set of these managers (lack of business skills) which impeded
their development in this role. Another factor impeding this aspiration was the
pressing demand of line managers for enhancing the efficiency and effectiveness in
service delivery due to which the Relationship Managers served as a virtual mini HR
function to the line managers, aiding them in their day to day activities.
Consequently this became their mandate and the corporate HR team felt that they
had gone native as they did not integrate their respective domains with the overall
HR strategy. A probable reason for the lost opportunity to develop them as business
partners (strategic role) can be attributed to the early development stages of the HR
function in which the emerging concept of an HR business partner was not
completely understood.
The only bank in our sample where the position and role of a business partner was
evident was GLOBAL BANK. The business partners in this bank worked in tandem
with the line managers to ensure that the HR perspective was inculcated in the
decisions made by their respective business units. Hence, they performed a strategic
role as ascribed in previous studies by Ulrich et al., (2008), Pickard (2004) and
Ulrich and Brockbank (2005). Also, GLOBAL BANK was the only exception in our
data set where the three legged model of Ulrich was implemented. In line with
research by Ulrich (1995; 1997), Ulrich and Brockbank (2005) and Francis and
Keegan (2006) we found the presence of business partners who functioned as
generalists to provide strategic input. Also present was a centre of expertise that
provided specialist input in various HR practices and acted as a reference point for
line managers, as suggested by CIPD (2007) and a centre for shared services that
provided the operational support. The centre for shared services has previously been
cited by Ulrich et al., (2008) as being responsible for transactional work and for
providing benefits of efficiency is service delivery.
After having discussed the influence of the structure of the HR function on the
attainment of the strategic HR role (or otherwise), we now integrate into our
discussion the last influencer examined in this research which is the skill-set of HR
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employees. Our study revealed that across the case-study banks and to a greater
extent in the domestic banks, the skill-set of the HR personnel varied to quite an
extent. This was a result of the composition of the employees who performed in the
HR function. There were a significant number of employees who were young and
newly hired; they had professional qualifications but lacked experience and the
necessary skill-set to perform in the capacity of specialists and strategic partners.
contended that apart from the new emerging skill-set for HR employees, there was a
need for function specific training as well, and more significantly HR employees
needed to develop leadership and networking skills to improve the profile of the HR
function and to represent its perspective assertively.
Brockbank (2005) and Caldwell (2008) have also identified network skills and
personal credibility as skills required by HR personnel in addition to business
knowledge which they propose is key for HR employees in developing a deeper
knowledge of the business and providing meaningful input. Hence, we suggest that
the skill-set of HR employees needs to be assessed from multiple angles which
include their qualification, experience and HR specific training because their
combined affect determines the strength or otherwise of the skill-set.
Further, our findings also highlighted that the two areas line managers felt the HR
employees lacked most in and thus needed to develop included, business knowledge
and strategic orientation because of which they felt the HR function had a weak
strategic role. Thus, we can confirm the findings of Inyang (2010), Ulrich and
Brockbank (2005) and Caldwell (2008) who found that the HR employees needed to
develop expertise in the business domain in order to perform in any strategic
capacity. An exception was GLOBAL BANK where the due to the role of the HR
business partners, there was a mixed perception with line managers reporting that
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some HR managers had developed business acumen but that they also needed to
develop depth in the area. Therefore, aligned with Tamkin et al., (2006), we also
found that the lack of business acumen impeded the ability of the HR managers to
perform in the strategic role of a business partner. Hence, we conclude that not
much significant change was evident in the skill-set of HR employees but the
awareness to overcome the most obvious inadequacies in the skill-set (business
acumen and strategic orientation) which were directly related to the dispensation of a
strategic role was evident. In addition to the low profile of the HR function and HR
Head, the lack of devolution and underpinned reasons for changes in the structural
configuration of the HR function, it was the lack of a skill-set in the emerging role of
a business partner that appeared to impede the intent of the HR function to adopt a
strategic role.
The study employed a predominantly qualitative research design; data was collected
through 85 in-depth interviews of HR managers, senior managers, line managers and
two industry experts, in an attempt to incorporate the views of multiple stakeholders.
Also, the absence of prior related data in Pakistans setting which could have
provided this study a context was covered by the interviews of the two industry
experts. The case study method was chosen to report the data in order to embed the
findings in the context of the banking sector of Pakistan, especially the eight casestudy banks studied. Our intention was not to generalize the findings of this study
but it was to understand the why and how of the influences which facilitated and
impeded the attainment of a strategic orientation in the role performed by the HR
function. The sample of eight case-study banks was sufficiently deep to cultivate a
contextual and reflective insight into the strategic role of the HR function.
Considering that our research primarily focused on the state of the HR function and
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The theoretical implications of this research extend across the realm of International
HRM to add the perspective of Pakistan. Our contribution in this area highlights that
weak institutions create person / individual centric rather than system centric
process, policies and procedures that are prone to adhoc decisions and practices.
Also, the individual centric systems are not sustainable in the long-term as they
depend on the status, profile and strengths of individuals and may lose their position,
role, efficiency and effectiveness with the separation of individuals from the
organisation.
situation. Additionally, when systems start to develop (like the HR function in this
research), the new roles required of them become a challenge, especially if the skillset of employees has not been upgraded on a consistent basis. Also, the internal
shifts in power of the different stakeholders in such organisations start to impede the
pace of development, as was evident in the mindset of line managers in the casestudy banks who found it difficult to marginalise their own role and to accept the HR
function in a different role / capacity.
Within the confines of HRM, we add based on our research the idea that when the
HR function is developing in an organisation, there are greater opportunities in the
domestic rather than foreign organisations to perform in a strategic role, although
this is a difficult task. This is because our research highlights that the HR function in
the foreign case-study banks was restricted as many HR policies and systems were
cascaded down from the global HR function.
innumerable opportunities for developing a strategic role, there are obstacles like
legacy issues, historically low profile of the HR function and the out dated skill-set
of HR employees which impede the efforts towards achieving a strategic role
orientation.
function.
devolution, HR structure and HR skill-set which has sparingly been done in extant
research. Our contention for adopting this approach (integrating indicators and
influencers of a strategic role) emanates from the fact that evidence of a strategic HR
role or the influence of particular HR elements (HR structure for example) on the
strategic role do not provide a holistic view. For example, if the indicators are
studied in isolation, they may provide answers to the questions of what role is being
performed by the HR function, or the presence of a particular role (strategic).
However, the indicators cannot reveal why and how particular HR roles emerged or
did not emerge.
Related to implications for future studies, we highlight the limitations within our
research which provide avenues for future research. While the sample of eight casestudy banks enhanced the generalizability of the findings of this study, at least in one
sector, it restricted a deeper analysis of relationships at the micro-level which can
influence the role orientation of the HR function. Our findings highlighted the
divergence in the views of HR and line managers and the underlying conflicts and
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tensions between these key stakeholders which have previously been studied in
research, in the context of the role-set theory and negotiated evolution theory. It is
suggested that future studies can focus specifically on a more holistic rather than
embedded case approach to identify the complex nature and entangled relationships
between the multiple stakeholders in an organisation to respond to some interesting
questions such as: How and why can the perceptions of line managers affect the
image of the HR function in an organisation and the resultant influence it can wield
in an organisation? How can the differences in the powers, image and resources of
different stakeholders in an organisation influence the role orientation of the HR
function? How can the dominance of one stakeholder / group over another in an
organisation affect the level of influence and discretion each has in the strategic
decisions of the organisation?
A cross comparative case analysis technique was used to report the current state of
the HR function across the eight case-study banks in our research but this choice did
not enable us to study the patterns of change. Hence, it is suggested that future
studies in the context of changes in the HR function in Pakistan or other Asian
countries where such research is limited, needs to employ a longitudinal research
design. The longitudinal research approach is employed by researchers in the West
to study the change in the strategic role of the HR function, to describe patterns of
change and to establish the direction and magnitude of the change. Such research
can provide answers to critical questions which may include the following: What
different stages of evolution had the HR function undergone before achieving its
current state and orientation? Which stage of evolution has been the most critical in
shaping the current stage that the HR function is in? Which drivers are common
between the different evolution stages and why? Which drivers were unique and
particularly related to a specific evolutionary stage? If such a design is employed in
the integrated study of the strategic role of the HR function and the impact of
influencing factors on this role, historical trends in the relationship can become more
evident.
which resulted in changes in the state of the HR function across the banks, regardless
of their size, ownership and market coverage. However, this single sector study
restricts the application / implications of the findings made herein as they cannot be
extended across other sectors. Hence, future research can consider a cross sector
sample to examine whether these findings can be extended to other organisations
operating in different sectors across Pakistan. It can address questions such as:
Which are the key regulators and professional bodies in the different sectors and how
do they influence the role of the HR function? Is there a direct sector level influence
on the role adopted by the HR function or does it act as a mediating variable only?
Which other organisational and environmental factors mediate the relationship
between the sector related variables and the role adopted by the HR function?
Finally, it can be stated that this research was scoped in a certain theoretical and
methodological framework but that altering these lines of investigation, future
research can contribute more towards the development of prescriptive models that
can provide further guidance to practitioners working in the corporate sector of
Pakistan. More specifically, our research provides guidance to practitioners in the
areas of structuring the HR function to attain a strategic role, developing
mechanisms which can bridge the perceptual divide between HR and line managers
and identifying the obstacles which can impede the adoption of a strategic role by the
HR function. Also, our research can aid academics in extending the debates on
316
HRM and the role of the HR function in the context of Pakistan which is currently
under-researched in literature.
8.7. Conclusion
The strategic role (or otherwise) performed by the HR function forms the foundation
of our research which attempted to explore the presence of a strategic role and the
influence of contingent factors such as devolution, the HR structure and the skill-set
of HR employees, on shaping the role adopted by the function. This research was an
effort to cultivate a methodical, structured and coherent understanding of the
strategic role of the HR function and the influencing factors which tend to facilitate
or impede the development and dispensation of this role.
addressed the question of the nature of the role played by the HR function in the
case-study banks examined in Pakistan and whether the role being performed could
be termed as strategic.
Firstly, broadly stated, our study was unable to establish with much certainty, the
significant presence of a strategic role of the HR function as opposed to its
traditional operational / administrative role, in the case-study banks examined in
Pakistan. However, there was evidence of an intended shift towards adopting a
strategic role. This signifies that despite the intent and aspiration of the HR function
to perform a more strategic role and the accompanied changes in its structure, extent
of devolution and skill-set of HR employees, it is yet some distance away from
significantly contributing in the strategic realm. Secondly, our analysis indicated a
low level of devolution of HR activities to line managers; resultantly, the HR
function was unable to increase its strategic role. Thus, devolution did not influence
the role of the HR function in a manner which could enhance its strategic
contribution. Thirdly, we found that the structural changes in the HR function which
were outwardly made with the intent to enhance the strategic role of the HR
function, did not result in considerable, meaningful outcomes. Fourthly, the skill-set
of the HR employees appeared to be inadequate in terms of the business acumen and
strategic outlook which impeded the strategic contribution by the HR employees.
The detailed conclusions based on our findings highlight the presence of a contested
definition (from the perspective of HR and line managers) of the strategic role of the
317
HR function and a lack of clarity on what constitutes and provides evidence of the
presence of a strategic role. We employed distinct dimensions to evaluate the nature
and degree of presence of a strategic role and uncovered distinct features that led to
the lack of strategic orientation of the HR function in the case of the case-study
banks examined. Although the HR Head had a direct reporting channel with the
senior managers, it was not represented on the board of directors in any case-study
bank. The HR representation in management committees and the upper tier of
decision making was mostly a token presence that was generally devoid of much
strategic input. An institutionalised HR function was found to develop a better
strategic relationship with line managers and was facilitated by organisational
contingencies to attain a larger, strategic role in the organisation. Conversely, in the
absence of a strong, institutionalised HR function, the disposition, personality and
profile of the HR head became more significant and where the HR Head embodied
the HR function, he derived his influence from his business knowledge and past
corporate experience.
In addition to the role of the HR function, three main discursive themes emerged
from our study, one of which was the effort made by the HR function to devolve HR
318
activities to line managers. The other two include the effort to re-configure the
structure of the HR function and an assessment of the skill-set of HR employees.
However, these efforts largely fell short of enabling the HR function to develop a
strategic role and to involve itself in the strategic decision making processes of the
case-study banks, to any significant extent. The intended strategic impact of these
influencing factors was mitigated because of the following reasons. Firstly, related to
devolution, the study revealed that the contested comprehension of devolution and
the contrasting perception of both stakeholders on what devolution entailed
exacerbated the tensions in their relationship. In two domestic case-study banks
reverse devolution appeared to have occurred because line managers had
traditionally dominated the decision making in the HR domain, as well.
Further,
Secondly, we found that the structural changes in the HR function which were
intended to facilitate the adoption of a strategic role by the function were largely
unable to introduce and strengthen this role in the case-study banks. This is because
no significant strategic input or involvement of the specialist cluster Heads,
Relationship Managers and the Corporate HR team was evident in the activities
performed by the HR function. A plausible reason for this was that the underlying
drivers for change in the structure such as, achieving consistency, control,
standardisation, cost effectiveness and operational excellence diverted most of the
resources and time of the HR personnel in this direction. Hence, the focus shifted
from achieving the long-term strategic role to performing the operational role with
greater effectiveness. This was a consequence of the early development phase of the
HR function in the domestic banks at least, where the HR function had yet to build
its credibility in the operational arena as well.
Further, the presence of few specialists / experts in the HR function resulted in the
adoption of mechanisms such as clustering and segmentation to fill this void. Hence,
specialists were assigned administrative activities (which consumed most of their
time), in parallel with their specialist responsibilities which impeded their efforts to
319
limited their strategic role and virtually reduced their mandate to that of providing
operational efficiency.
In conclusion, based on our research, we can suggest that unless senior management
provides support to the HR function, line management accepts the HR function in a
strategic role and the HR function asserts its resolve, the intent of the HR function to
become strategic may not achieve success. Further, it is also important that the HR
practices are devolved to the line managers to create time for the HR function to
undertake strategic initiatives, the HR structure is configured to truly facilitate the
adoption of a strategic role and the HR employees are equipped with the requisite
skill-set. In the absence of these initiative, at best, a shift in the HR function towards
developing a strategic role may be evident, as in our case-study banks, but the
dispensation of a significant strategic role may not be realised.
more specifically the eight case-study banks. Our research not only contributes by
substantiating the findings of the Anglo-Saxon literature in the setting of Pakistan,
but it also highlights the significance of integrating multiple indicators and
influencers in order to develop a deeper understanding of the how and why, in
studies of the HR function. This can generate further debates in international HRM
literature as well as the research on HRM in Pakistan which is currently quite
insignificant.
From the practitioners perspective, this research provides value for HR and line
managers in the corporate sector of Pakistan which has yet to draw benefits from
academic research.
321
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354
Appendix A
INFORMATION SHEET
TITLE: The strategic role of the HR function in the banking sector of Pakistan:
Analysis of evidence and influencing factors
RESEARCHER NAME: Naukhez Sarwar
SCOPE OF RESEARCH: This research endevours to investigate the role the HR
function is performing in the banking industry of Pakistan. Our objective is to
highlight and identify the extent of the strategic orientation of the HR function
through an examination the HR-line relationship, the structure of the HR function
and the skill-set of HR employees because literature indicates the latters influence
on the role of the function. We study these factors in conjunction with the role of
the HR function due to their apparent connection which makes it important to study
the combined influence of these factors on the orientation of the HR function. The
intent of this study is to broaden the basic understanding of SHRM to a multifaceted
level representative of its complexity.
RESEARCH OBJECTIVES:
1. What is the current state of the HR function in the banking sector of Pakistan
and to what extent, if at all, is it performing what can be termed a strategic
role?
2. How has the devolution of particular HR responsibilities to line managers
influenced the HR functions intent to attain a strategic role orientation?
3. How have the characteristics of HR structure and HR skill-set influenced the
strategic role orientation of the HR function?
OTHER INFORMATION:
Participants in the research will be required to take part in an interview and the
confidentiality of the content of the interview and the anonymity of the participants
will be ensured. Caution will be exercised during the course of the research not to
subject the participants to any discomfort, pain or risk. Further, the participant is not
obliged to take part in the research and can withdraw at anytime during the course of
the study.
355
Appendix B
Faculty of Humanities
Consent Form for Participants Taking Part in Student Research Projects
Title of Project: The strategic role of the HR function in the banking sector of
Pakistan: Analysis of evidence and influencing factors
Name of Researcher: Naukhez Sarwar
School: MANCHESTER BUSINESS SCHOOL
Participant (volunteer)
Please read this and if you are happy to proceed, sign below.
The researcher has given me my own copy of the information sheet which I have
read and understood. The information sheet explains the nature of the research and
what I would be asked to do as a participant. I understand that the research is for a
student project and that the confidentiality of the information I provide will be
safeguarded unless subject to any legal requirements. She has discussed the contents
of the information sheet with me and given me the opportunity to ask questions
about it.
I agree to take part as a participant in this research and I understand that I am free to
withdraw at any time without giving any reason and without detriment to myself.
Signed:...
Date:.
356
Appendix C-I
Questionnaire for HR Managers
1.
How many people are employed in your HR function (please include all whose
job is in HR, regardless of reporting lines)?
2.
3.
Compared with five years ago, has your HR function grown, stayed the same
or reduced?
4.
5.
Has your HR function changed its structure over the last five years? If so how?
Prompt for: Have you added generalists? Specialists? Is there a corporate HR
team? Shared Services etc?
6.
Which drivers primarily resulted in the changes? Were they related to your
concerns, line managers concerns or senior managements concerns?
7.
Reference to the previous question, can you please specify what these concerns
were in detail and why they were considered significant enough to compel the
changes?
Prompt for: cost reduction? Improvement in service standards? Repositioning
HR? increased business focus etc.
8.
Reference to the previous two questions, can you prioritize these drivers in
order of their significance?
9.
Overall, what, if any, have been the main challenges of restructuring of the HR
function?
Prompt for: Defining roles, resistance to change, inadequate technology,
objections from line managers etc.
357
10.
11.
12.
If you have introduced shared services, what problems have you faced and to
what extent?
13.
14.
What, if any, benefits have you seen in introducing business partners? Explain
in detail how they relate to changes in the orientation of the HR function role?
15.
What, if any, problems have you had with the business partner role? Explain
how they may have impeded the aspiration to become more strategic?
16.
Have you introduced centre for specialist services? Why? Why not?
17.
Which HR practices have you placed in the specialist teams and why? If you
have not opted for specialization, please explain why?
18.
What, if any, benefits have you seen from introducing centres of expertise and
specialist teams? Please give examples to clarify.
19.
What, if any, problems have you had from introducing the specialist teams?
What would you say is the primary role of HR in your organization? How do
you define a strategic HR role orientation and what do you think entails this
role?
21.
What are the main objectives of your HR function? Please elaborate and
prioritize your responses.
358
22.
Please indicate how important you think each of the following is likely to be as
driver of change in people management policies and practice in your
organization in the next three years.
Important
Not Important
Business strategy/goals
Employee needs
Changes in products or services
Cost pressures
Benchmarking against good HR practice
Culture/Values of the organization
Views of senior management
Line managers
Employment regulation/government policies
Internal customer pressure
HR strategy
Globalization / competitive pressure
23.
Which activities do you specifically perform and which three are most
important in your view for the organization?
359
25. Do you think the personality of the HR Head has any influence in the direction
of its role orientation? If yes, how does it influence the strategic role of the
function?
26.
27.
28. Is the focus of the initiatives more long-term or short-term? Justify your
response with examples.
29. Do you feel the HR functions focus is on transactional or transformational
activities? Please justify your response with examples.
30.
Please indicate how responsibility is allocated between the HR function and the
line in terms of how decisions are taken in the following areas. (The research
kept marking the relevant columns).
Mostly
line
Shared
Shared
with lead
role
of
line
360
Employee relations
Training and development
Performance Management system
31.
Did you find any intention on the part of line managers to take more
responsibility for people management issues than that stated in the previous
question? Why or why not?
32.
What do you feel has impeded the devolution of HR activities? Which line
issues can you highlight that are creating these issues? Which issues of senior
management do you feel have created hurdles and why?
33.
Are there any issues emanating from the function itself or its staff creating
problems? Which are these issues and what problems are they creating?
HR SKILL-SET
34.
(1)
Important
Influencing /Political skills
Understanding of HR practices
Empathy/communication/listening skills
361
Most (2)
Biggest
Challenge
Leadership ability
Strategic thinking
Business knowledge
Negotiating skills
35.
36.
How have the changes to the way HR is organized influenced careers within
HR? Please elaborate.
Source: Adapted from CIPD (2007), The Changing HR Function: Transforming HR.
362
Appendix C-II
Questionnaire for Line Managers
1.
2.
Compared with five years ago, has your bank grown, stayed the same or
reduced? Please elaborate.
3.
Reference to the previous question, please share examples of the changes in the
bank and the reason for the changes
Prompt for: size, ownership, strategy, structure, Products.
4.
Has your HR function changed its structure over the last five years? If so how?
Prompt for: Have you added generalists? Specialists? Is there a corporate HR
team? Shared Services etc?
5.
Which drivers primarily resulted in the changes? Were they related to your
concerns, HR managers concerns or senior managements concerns?
6.
Reference to the previous question, can you please specify what these concerns
were in detail and why they were considered significant enough to compel the
changes?
Prompt for: cost reduction? Improvement in service standards? Repositioning
HR? increased business focus etc.
7.
Reference to the previous two questions, can you prioritize these drivers in
order of their significance?
8.
9.
10.
If you have introduced shared services, what problems have you faced and to
what extent?
363
11.
12.
What, if any, benefits have you seen in introducing business partners? Explain
in detail how they relate to changes in the orientation of the HR function role?
13.
What, if any, problems have you had with the business partner role? Explain
how they may have impeded the aspiration to become more strategic?
14.
Have you introduced centre for specialist services? Why? Why not?
15.
What, if any, benefits have you seen from introducing centres of expertise and
specialist teams? Please give examples to clarify.
16. What, if any, problems have you had from introducing the specialist teams?
HRS ROLE AND ACTIVITIES
17.
What would you say is the primary role of HR in your organization? How do
you define a strategic HR role orientation and what do you think entails this
role?
18.
Please indicate how important you think each of the following is likely to be as
driver of change in people management policies and practice in your
organization in the next three years.
364
Important
Not Important
20.
21. Do you think the personality of the HR Head has any influence in the direction
of its role orientation? If yes, how does it influence the strategic role of the
function?
22.
23.
365
24. Is the focus of the initiatives more long-term or short-term? Justify your
response with examples.
25. Do you feel the HR functions focus is on transactional or transformational
activities? Please justify your response with examples.
26.
Please indicate how responsibility is allocated between the HR function and the
line in terms of how decisions are taken in the following areas. (The research
kept marking the relevant columns).
Mostly
line
Shared
Shared
with lead
role
of
line
27.
28.
Are there any issues emanating from the HR managers in this regard? Are there
any concerns of line managers which have impeded efforts of devolution?
HR SKILL-SET
29.
366
(1)
Most (2)
Biggest
Important
Challenge
Influencing /Political skills
Understanding of HR practices
Empathy/communication/listening skills
Leadership ability
Strategic thinking
Business knowledge
Negotiating skills
30.
31.
How have the changes to the way HR is organized influenced careers within
HR? Please elaborate.
Source: Adapted from CIPD (2007), The Changing HR Function: Transforming HR.
367
Appendix D
VINTAGE Bank
Human Resource Department
CEO & President
GM HR Strategic
Planning, Resourcing,
Comp. & Ben., RM HR
Retail & Consumer
Head International
Banking
Head HR
GM HR
Operations &
Employee
Relations
GM Industrial
Relations &
Disciplinary
Action
SM RM HR
Corporate Banking
GM RM HR
(North)
SM Relationship
Management (Central),
HR Strategies
SM RM HR
Corporate
Banking
368
RM HR
International
Banking
Appendix E
CLASSIC Bank
Human Resource Department
CEO & President
Head HR
Division Head
Compensation &
Training (South)
Compensation
Manager
Department Head
Training
Department Head
HR
Administration
Department Head HR
Strategy Planning
Executive
Secretary
Divisional Head
HR Financial
Services
Manager HR
Associate
Strategy
Manager
Disciplinary
Action
Manager HR
Associate Admin
HR Project &
Policies
Department Head
Employee Relations
Manager
Industrial
Divisional Head
OD & Recruitment
Manager HR
Policies, Development
&Procedure
Senior Manager
Relationship
HR Relationship
Manager
HR Relationship
Associate
Manager HR
Marketing,
Branding &
Manager HR
Manpower,
Planning an
Budgeting
369
TRADITIONAL Bank
Human Resource Department
Appendix F
Head HR
Secretary
Head HR ABC
Group
HR Officer ABC
Group
Incharge Staff
Compensation
and Services
Inchange HR
Operations
HR Officer Payroll
HR Officer (Record
Room)
HR Officer
Hospitalization
HR Officer
(Documentation)
HR Officer (SHBF)
HR Officer
Verification
Incharge
Recruitment &
Selection
HR Officer
Recruitment
Incharge Strategic
Planning & OD
Manager
Performance
Management
Manager Strategic
Planning & OD
Incharge Training
& Development
Incharge Training
Academy
Trainer
Coordinator
HR Officer
Confirmation
Incharge Post
Recruitment
Incharge MIS
Officer Post
Recruitment
OD Specialist
Performance
Management
Specialist
370
MODERN Bank
Human Resource Department
Appendix G
CEO
General Manager HR
& Quality Assurance
Assistant to GM HR
& QA
GM HR, North
AGM
Compensation/
Special Project
Sr. Mgr. HR
Services
AGM HR Ops
Mgr Recruitment/
Emp Communications
GM HR, South
Officer Batch
Recruitment
AGM Benefits
Officer Employee
Communications
HR Ops (south)
Manager
Personnel
Mgr Disciplinary
Action
Coordinator Central
Area IV
RM Central Area V
Recruitment Testing
Officer
RM Islamic Banking
Officer Special
Projects
Mgr. PF/Gratuity/
Income Tax
RM Head Office
Portal Support/HR
Coordinator
Mgr Recruitment
(South)
Manager MIS
(South)
RM North II
RM Central Area II
371
Manager
Performance
Mgmt.
Manager
Disciplinary Action
GLOBAL Bank
Human Resources Department
Appendix H
CEO
HR Regional Head
MENA
Head HR
Coordinator
Head of HR CB
(Business Partner)
Head of HR WB
& Support
(Business Partner)
Head of Employee
Relations
RM - CE
RM RISK
RM Support
Recruitment
Mgr-CB
RM - Assets
RM GTO
RM - WB
Manager
Reward
Head of HR
Service & Delivery
(Shared Services)
Manager
Induction
Manager L&TD
Manager
Benefits
Manager L&TD
Funds Officer
Keys:
RM - North
CB Consumer Banking
RM - Central
Manager L&TD
Manager
People Soft
Manager L&TD
Recruitment
Officer
Manager
Payroll
Asst Manager HR
372
WESTERN Bank
Human Resource Department
Appendix I
CEO
Head HR
Learning &
Development
Manager
HR Business Partner
HR Officer
Administration
Manager
Recruitment &
Selection
Manager Rewards,
Compensation &
Benefits
Manager Performance
Management
373
HR Business Partner
HR Governance
Manager
ANGLO Bank
Human Resource Department
Appendix J
CEO
Head HR
Recruitment and
Performance Management
Officer
Employee Relations
Manager
Compensation &
Benefits Officer
Engagement &
Resourcing Officer
HR Administration
Officer
Employee Relations
Officer
374
Group HR Systems
Manager
Learning and
Development Manager
TRANSCO Bank
Human Resource Department
Appendix K
CEO
Head HR
Benefits Officer
Performance Management
Officer
HR Compliance
Compensation Officer
Training Head
Training Officer
Appendix L
President & Chief Executive
Bank FS3
NaukhezSarwar
PhD Candidate MBS
-- Dec 2008
376